Investment Property Finance

There was a time when investing in property was a difficult process. Thankfully, it’s a process that is being constantly simplified and has now become a viable investment option within reach of many property owners.

So, you have decided to purchase an Investment Property, whether it's investment property number 1 or number 100, you may be still a little nervous. ​Financing investment property is not always straightforward.

Oftentimes you need an outside-the-square solution that meets your loan requirements today and into the future.

Why invest in property?

A person will invest their money looking to provide a return in the future that’s greater than the initial investment.

One of the most popular methods of investing is to buy a property with the expectation that the capital value of the property will increase over time, plus provide a positive net cash flow to pay for all expenses of ownership of that property and with some cash leftover.​

Capital growth 

Property is an asset class that has appreciated in value over time. While there may be peaks and troughs in the property cycle, the Australian property market is considered one of the least volatile investment options. Based on the performance of the Australian property market, over the long term, you can generally expect the value of your property to grow and provide a strong return on your initial investment.

Direct involvement

Unlike many other investment types (shares, super and managed funds) where the most you can see of your investment is some numbers on a page, an investment in property means you have something tangible to show for the money you’ve invested. An added bonus is that you can renovate, decorate and personalise the property to suit you. These changes can add further value to your property, meaning your potential return at sale and the amount you can charge in rent increases too.

Income tax benefits

When you invest in property, your investment may provide you with many benefits come tax time, provided you have the right investment structures in place. Through negative-gearing, you may be able to save considerable amounts of tax on your personal income. By taking a long term view and keeping your property for more than 12 months, you may be eligible to pay a reduced amount of capital gains tax on any profits from the sale of the property.

How to get started

1. The Deposit - 20% + Establishment Costs + Shortfall in Valuation

Raising the deposit for your first investment property is accomplished in one of two ways, either through diligently saving for that deposit or by borrowing against the equity in your principal place of residence (aka their own home they live in.)

• Disciplined budgeting of your income and expenses is required to save for the 20% deposit of the value of the property you are considering purchasing.
• Other ways to finance your deposit could be through

• Gifts from family or friends.
• It could potentially be via a private loan from someone you know.
• Apply for a Deposit Gap Loan from a registered lender

Alright, so we’ve got the deposit which is somewhere between 5 to 20% plus we need money for the costs like stamp duty, valuation shortfall, and things like that.

1. The Balance - 80% of Contract Price (or 80% of Valuation if Lower)

An investment home loan from a registered mortgage lender (Bank, Building Society, Non-Bank lender, Private lender) is the most common way of financing the rest of the property purchase price.

The home loan that you choose is ultimately up to you but obviously, a competent mortgage broker can help you with the information you need to determine which lender and product will suit you best. 

By talking with us, we can help you to get the loan you need.