Whether you’re thinking of getting into property investment or purchasing a holiday house, you need to do some serious homework before making the move. The process of purchasing a second property is similar to getting your first home but if you’re thinking of building a property portfolio or if the holiday house is part of your retirement plan, then there’s more things to consider.
To many people, properties are long-term investments. You need to have a budget plan to make sure you can afford the ongoing repayments on two mortgages. Also think about any major life changes on the horizon. For example, you may be planning to expand your family, or you might need to support a parent in the coming years.
PROPERTY MARKET AND TRENDS
Research what’s happening in the current market and whether it’s the right time for you to buy. Get to know the area you’re considering by speaking to local residents and real estate agents. It’s also wise to look into the short and long-term planning for the area. For example, nearby construction may affect your ability to find a tenant.
THE OLD ‘LOCATION LOCATION LOCATION’
If you’re buying a property as an investment, carefully consider its location. Buying in a high-demand area is likely to see you enjoy a constant flow of income from the rent.
You’ll need to provide your lender with a rental estimate letter, which you can get from the agent managing the property. Keep in mind that generally lenders only take 50–80% of the rental income into account when calculating whether you can afford the loan.
MAKING AN INFORMED DECISION
Whatever your reason for considering a second property, being well-informed will ensure a smoother purchasing process and a financially secure future.
Mortgage Corp can arrange FREE property reports for you. We have access to the same tools and insights used by real estate agents and the big 4 banks, including property history (sale prices for more than 20 years), comparative sales and rentals in the area. This will help you make an informed decision when researching and bidding for your dream property. Request a Free Property Report here!
CORRECT MORTGAGE STRUCTURING
The amount you can borrow and the type of loan you choose will depend on various factors, including the equity in your current home, your income and expenses, and your property valuation. It helps to get quality advice on the right mortgage for you, along with other considerations such as negative gearing, and how to structure your loan to maximise tax effectiveness.
Mortgage Corp specialises in helping successful professionals and property investors access attractive rates, minimise loan approval red tags and apply strategic loan structuring for long term investment success. We’ve developed a Free Finance Solution Session to help you get the right loan quickly and easily, request a Free Finance Solution Session today!