Property has been considered a popular path to wealth for Australians for many years. Buying their own home is often the first significant investment most people make.
Purchasing another property may well be the second – even before shares and other assets. However your first investment in property need not be your home. Buying a rental property can be a good way to gain capital growth that can be used later to help buy your own home. Sensible investments in property have many attractions. Property can be less volatile than shares and it tends to be regarded as a safe haven when other assets are declining in value.
Property has the potential to generate capital growth (an increase in the value of your asset) as well as rental income. There are also tax advantages associated with negative gearing.
Buying real estate, whether you are buying the family home or an investment, is one of life’s most important financial decisions. However, when buying an investment property, it is wise to remember that you are making a business decision. You are not buying from the heart, but from the head. You are buying the property because you expect it to appreciate in value and give you a financial return.
There is much to consider and plenty to research. Firstly you need to work out how much you can borrow. This is where our services will really help you. Make sure you have an accurate and detailed budget that takes into account all expenses associated with purchasing a property including stamp duty, council rates and other fees. We can help you identify these extra costs. Use our budget planner to get a realistic picture of where your money goes now. Use our loan calculator to estimate your repayments.
Many first home owners forget to budget for things they haven’t been used to paying for themselves like electricity, water and other utilities and for items such as insurances.
Budget for maintenance and even simple things like stocking up the fridge and pantry for the first time – many of the things we take for granted when living at home.
Ensure you go to many open inspections and do your research on the internet before purchasing to ensure you have a good indication of property prices in your desired location. If you find that you cannot afford to buy your dream home in your desired location consider adjacent suburbs that may be more affordable.
Our role as your mortgage specialist is to provide you with a comparison of various loan options from a panel of lenders and assist you with choosing the right loan for your circumstances. Whether you’re buying your first home, upgrading, refinancing, investing in property or wanting to pay off your existing home loan sooner, there are many options available when choosing a home loan. Because your home loan will probably be your life’s biggest investment it is important that you obtain the best advice and make a decision based on the option that best suits your personal circumstances. Our role as your mortgage specialist is to guide you through the process to ensure that all your needs and options are considered.
Types of Loans
These loans are the most common type available. The variable rate loan offers more features and flexibility than the basic or “no frills” loan, so the rate is usually slightly higher. The extra options (for example a redraw facility, the option to split between fixed and variable, extra repayments and portability) should be taken into account when choosing your type of variable loan. Repayments will vary as interest rates fluctuate.
These loans are set at a fixed interest rate for a specified period (usually one to five years). The advantage of allowing you to organise your finances and repayments without the risk of rising interest rates is offset by the disadvantage of not benefiting from a drop in rates. At the end of the term all fixed loans automatically revert to the applicable variable rate. At this stage you have the option to lock in another fixed rate for a new term, switch to variable or go for a loan where you split with a percentage fixed and the remainder variable. However these loans may have limited features and lack the flexibility of 100% variable loans. There may be early exit fees and limited ability to make extra payments.
These loans combine the features of various products and can have the security of a fixed rate loan and the benefits of a variable loan. They can also combine a standard term loan and a line of credit. For example part of the loan can be borrowed at a fixed interest rate with the remainder on a variable rate. These loans can be split into as many products as you want to reflect your personal circumstances
An offset account is a savings account attached to your loan account. Money in this account is offset against the loan amount thereby reducing interest payable. Significant savings are made by reducing compound interest with the use of these accounts.
Other advantages of an offset account include being able to pay off your home loan faster than the repayment schedule demands and being able to redraw money if the need arises.
These loans are a great way to access the equity in your home to use for things like home renovations, investments or other personal purchases. Repayments on a line of credit loan are determined by the interest rate applicable at that time. If you have sufficient equity in your home and your current loan structure doesn’t allow for withdrawing your equity, you will need to make a separate application for a line of credit loan. You have the added advantage of being able to make unlimited deposits/repayments as your repayments are not set. You must check the conditions of these loans as they are sometimes more expensive than standard products.
These loans are offered to provide an all-in-one home loan package. They offer interest rate and fee savings on your home loan, credit card and transaction accounts. Some lenders also waive the annual fees for your credit cards. An annual fee ranging from $120 to $395 is usually applicable on these loans. Professional packages can also offer amazing flexibility, with some lending institutions willing to waive product switching fees when changing from a variable to a fixed rate or converting a principal and interest type loan to an interest only loan.
Loan consolidation is where you are able to combine multiple debts (like credit card and personal loans) into a single loan with one repayment. The lower overall interest rate provides the advantage of using your home loan to consolidate debts
If you’re building a new home or planning major renovations to your existing home, a construction loan is generally the most appropriate funding option. The difference between a construction loan and other types of loans is that a construction loan is drawn down in stages and not paid as a lump sum. The draw downs enable the builder of a home to finance the various stages of the construction process from the acquisition of land to the various stages of building.
A bridging loan may be necessary to cover the financial gap when buying one property before the existing one is sold. This finance is generally secured against your property as you are utilising the equity in your existing property. Usually bridging loans are short term and more expensive than other types of loans.
Do you know how much super you have or where it is invested?
Did you know you can take control of your retirement by using your superannuation to borrow money and invest in property of your choice? Our expert team of finance, planning and accountancy professionals will walk you through the entire process hand in hand. We can even provide a list of suitable investment properties to take the guesswork away.
Things you may not know:
You can combine your superannuation with other family members to allow you to buy property within the fund.
Property owned by the super fund sold at the right time may have zero capital gains tax applied.
Self managed super funds are the fastest growing segment in the market – for one main reason – control!
Don’t confuse your SMSF with personal investment. They are separate entities.
Not everyone is suited to an SMSF or SMSF HL.
A balance of ~$150,000 is often a benchmark for a minimum balance.
Will need to complete an annual tax return.
Cost on set up for the Bare Trust or Installment Trust can vary greatly depending on who you use – estimate $3,000 to $5,000.
A reverse mortgage loan is a loan for people 65 years and over against the equity or asset value in their home, holiday home or investment property. This equity can be taken out in a lump sum, through regular ongoing payments or a combination of both. Interest is added and no repayments are necessary. The principal loan amount is not required to be paid back until the borrowers either pass away or leave the home. Legal advice is recommended prior to considering this type of finance.
A personal loan might be right for you if you want to fund the purchase of a car, boat, holiday or if you want to consolidate debt. Personal loans may come with lower interest rates than credit cards, so funding a big expense or project with a personal loan could save you thousands of dollars on interest payments.
Property has been considered a popular path to wealth for Australians for many years. Buying their own home is often the first significant investment most people make. ONE-TO-ONE BROKERS variety of investment loans can help first time home buyers and investors to navigate the right path.
Advantages of investment loans
Purchasing another property may well be your second investment – even before shares and other assets. However your first investment in property need not be your home. Buying a rental property can be a good way to gain capital growth that can be used later to help buy your own home. Sensible investments in property have many attractions. Property can be less volatile than shares and it tends to be regarded as a safe haven when other assets are declining in value. Property has the potential to generate capital growth (an increase in the value of your asset) as well as rental income. There are also tax advantages associated with negative gearing. Buying real estate, whether you are buying the family home or an investment, is one of life’s most important financial decisions. However, when buying an investment property, it is wise to remember that you are making a business decision. You are not buying from the heart, but from the head. You are buying the property because you expect it to appreciate in value and give you a financial return.
Property investments are not always a simple procedure. Whether building or buying established, it’s often hard to know where to turn for advice and where to look for the investment best suited to you. You may not even be sure of the right type of investment for you. ONE-TO-ONE BROKERS have a high level of experience with these matters and can even include a buyer’s agent that, for a fee, can research, locate and even negotiate the purchase for you. More often than not, finding an area with a driver behind it is essential for capital growth. A new school, shopping centre or rail link can add value to a purchase that many may not even be aware of yet. Subdivision of an existing property can also offer a great way to increase value to an investment but…. how do you do this? Lean on our skill-sets and experience to help provide the information you need to make an educated decision on your future in property investment.