Investment Property

An investment property can be newly built or existing home. Most people choose to buy an investment property when you have built equity in your own home.

What is Equity?

Equity is the difference between the current value of your home and how much you owe on it.

For example, if your home is worth $800,000 and you still owe $420,000, your equity is $380,000 – as with any home purchase Lenders Mortgage Insurance will normally be applicable if you are borrowing more than 20% of the property value.

New lending rules are strict on using equity so check with us first on what you can borrow and how much equity the lender will allow you to use.

Four times your available equity to determine the cost of the property

In the example above that would mean an investment property of up to $880,000 – but you would also need to show your lender that you can afford to pay that back. Most lenders will “discount” the potential rental income to allow for vacancies and costs.

Remember to play it safe. If you don’t have any funds outside your home equity, then it’s risky to use every last cent of your usable equity to invest in property.

You always need a buffer – back up funds in case things don’t go to plan. Even if it means you can’t invest for a while, it’s important to keep yourself protected.

Ultimately, using equity to buy an investment property can be a smart move.

If you become part of our property investors club you get all the benefits of the
Homebuyers Club plus, Depreciation tax schedule referral and Meeting with taxation specialist re: structuring finance (note this is an initial meeting and advice will be general as it is a third party).

Get in Touch

Time to Move

Can you turn your current home into an investment?

If your property is well located and you can afford to hold it, it may make financial sense to borrow against the equity of your existing property and use this as a deposit for your next home.

The holding costs for your investment property could be subsidised by your tenant who’ll help pay your mortgage through rental payments. You will also be entitled to various tax benefits. (link to info sheet)

Consider if your new home or area has potential to grow. Does it meet all your current and near future needs? Is it close to shopping, parks, public transport and any other non-negotiables you’ve decided on?

What are the costs?

Weigh up all the costs of buying a new home beyond the property’s price, like stamp duty and conveyancing. Know the upfront costs of buying a house (link to stamp duty calculator)
What is ‘rentvesting’ and is it an option?

If your budget doesn’t allow you to buy the type of home you’re after, it may be worth considering rentvesting. Buying an investment in another location you can afford and renting where you want to live.