- Posted 12 Nov
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Property investing can seem like a scary prospect for a lot of first time property investors; taking the leap can be daunting if you’re not properly informed.
Before taking the leap, it’s important to complete the right research and ask the right questions so you can make the right decisions based on your specific situation.
Chat with your mortgage broker about the following questions so that you can avoid making costly mistakes…
#1. What’s my reason for wanting to invest in property?
This is something you should be clear on right from the start, as it will determine your investment strategy. If you’re simply looking to build equity, then your strategy will be vastly different to someone who is looking to build cashflow for retirement.
Understanding what your goals are around property investing will allow your mortgage broker to work with you on finding the right property and finance.
#2. How will I fund my deposit?
Coming up with a deposit for your investment property requires a bit of cash and there are few of us who have a spare 20% deposit sitting in a savings account. So where will your deposit come from?
If you already own your own home, then you may be able to access equity from this or any other investment properties you might have.
Chatting with your financial advisors about your strategy will allow you to figure out what you need to do.
If you’re looking to purchase multiple properties over the next few years, then you might opt for a smaller deposits so that you can make your deposit funds go further.
#3. How much can I borrow?
This is critical to your overall investing strategy. If you don’t know how much you can borrow, how will you know what properties you can afford to buy?
By chatting with an experienced mortgage broker like Australian Credit and Finance, you’ll be in a better position to understand what your options are. No one lender will provide you with the exact same amount, which is why chatting with us, will provide you with some flexible options.
#4. What type of property should I buy?
This ultimately depends on what your investment strategy is and how much disposable income you have available.
For example, you might decide to purchase a property that’s on a larger block of land because it provides the potential for future sub-division. This type of property would be lower yielding initially, costing you more monthly.
On the other hand, you might choose to purchase a cashflow positive property, in which case you’re going to be spending less on a monthly basis.
Make sure you understand what your monthly commitments will be based on the type of properties your considering before you sign on the dotted line.
#5. What type of home loan should I get?
This is where talking to a mortgage broker will help. If you read the newspaper on a regular basis, you’ll see that fixed vs. variable is talked about a lot, making it confusing to know which option is best for you.
There are advantages and disadvantages to both types of loans, and again, it really comes down to what your investment strategy is and how much you can afford to pay on a monthly basis.
There are ways to pay your loan back faster, as well as options to pay interest only. Chatting with one of our qualified mortgage experts will help you make the right decision for your needs.
#6. What are my next steps?
This largely depends on how many properties you’re looking to accumulate over the next few years.
Once you’ve had a couple of properties for a few years, you may be able to access equity in them and use these as security on new investment properties.
You should also regularly review your mortgage loans and goals to ensure that you’re getting the best deal and are still on the same investment strategy as you were 12 months ago.
As your property portfolio appreciates, there will be options available that will be better suited to your situation and a vast improvement on your original loan.
This is why it’s important to be constantly aware of where you portfolio sits and how your returns are doing.
No matter what part of the property investing phase you’re at, our team can help improve your mortgage loans or provide you with refinance options as needed. Simply get in touch with our team today to discuss your next steps forward.