Break into the property market with smart financial choices to maximise your returns.

Investing in property is one of the safest investment bets in Australia. Although there is always some risk, history shows good money to be made in the property market.

The first step in buying an investment property is knowing if you can afford one. For this, you need to establish whether you qualify for an investment loan, whether you can use equity to buy an investment property and then determine how much money you need to (and can) borrow.

Having the funds to buy an investment isn’t the only hurdle. You need to determine the potential return on investment, evaluate how the loan repayments will impact your life, and weigh the risk with the rewards.

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Essential Questions You Need to Ask

Here are some essential questions you need to ask yourself before buying an investment property:

You must have a sufficient 5-10% deposit to qualify for an investment loan. You’ll also need at least 3-months of savings in your bank account, a clear credit history, and stable income and employment.

How much money you can borrow will depend on the lender, but it is generally between 85%-90% of the property value. However, if you can borrow 80% of the property value or less, you will avoid Lenders Mortgage Insurance (LMI) fee. Based on the Gold Coast’s median house price, the LMI would be $35,000 to $38,000.

There are many other associated fees to factor into the cost of buying an investment property, including stamp duty, which can be as much as 6% of the property value, the valuation fee, transfer fee, legal fees and conveyancing costs, loan fees, and landlord insurance.

Investing in property can be a great way to build wealth and generate passive income. However, it’s important to have a 20% deposit to avoid Lender’s Mortgage Insurance (LMI). LMI is a one-time fee paid to the lender when you borrow more than 80% of the property’s value. It can add thousands of dollars to your loan, so it’s essential to avoid it if possible.

There are a few things you can do to save for a 20% deposit for an investment property:

  • Increase your income. One of the best ways to save money is to increase your income. This could mean getting a part-time job, starting a side hustle, or asking for a raise at work.
  • Reduce your expenses. Another way to save money is to reduce your costs. This could mean cutting back on eating out, cancelling unused subscriptions, or finding cheaper ways to get around.
  • Set a budget and stick to it. Once you know how much money you have coming in and going out, you can create a budget to help you save money. Remember to include a line item for your savings goal and stick to it as best you can.
  • Get help from Centaur Financial Services. If you’re struggling to save money, you may want to consider getting help from one of our financial advisors. We can help you create a budget, develop a savings plan, and reach your financial goals.

Saving for a 20% deposit for an investment property takes time and effort, but it’s worth it in the long run. By following these tips, you can reach your goal and build wealth through property investment. Review the tips outlined on our I Want to Save for a Goal page to help you achieve this goal.

While many buy an investment property for long-term financial gains, there are significant tax benefits to avail from along the way.

Negitiving gearing is the most attractive tax benefit, which you can take advantage of if your investment expenses, including loan interest, outweigh your rental income, resulting in a loss. In such cases, the loss is offset against your income to reduce your tax.

If you would like to know more about the tax benefits, need help acquiring a home loan, or need expert financial advice to maximise your savings to help you save for a 20% deposit, get in touch with the financial advisors at Centaur Financial Services.

Start Saving to Buy An Investment Property Today

Are you struggling to buy an investment property? If so, you’re not alone. Millions of Australians are facing the same challenge. The cost of property has been rising steadily for years, and it’s now out of reach for many people.

But don’t give up! Centaur Financial Services can help you get into the property market. We offer a range of products and services that can help you save for a deposit, find the right home loan, and manage your investment property. Contact us today to learn more about how we can help you achieve your dream of owning an investment property

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