Your choice of loan can be just as important as the property you select

Property remains one of Australia’s most popular investments. Its stability, performance, and familiarity over the long term make it ideal for individuals and families who want to start a portfolio, or to continue to grow an existing one.

If you are looking to get a start or to add to it, I can help by identifying the right loan for your needs.

In this tight economic climate, every dollar counts, so finding a loan that combines a low competitive interest rate, with the right mix of product features, all designed to maximise your investment returns is vital.

Please bear in mind that you should always seek independent financial advice from a qualified professional before making any investment decisions, and any information contained on this site is for education purposes only and does not take into account your personal financial circumstances.

Why would you consider investing in property?

• Property continues to perform solidly

• Unlike the share market, it’s an asset that you can easily understand

• You can borrow more to purchase property than other investments

• You can control the value of your property

• You can negotiate the price

• You may get great tax benefits

• You could claim against depreciation

• It offers stability over the long term

For many people, property is the preferred investment vehicle to get them where they want to be. Despite short-term fluctuations, property shows continued capital growth while providing ongoing income via rents and tax advantages. Unlike shares, where your fortune could change within seconds, property offers a relatively stable performance.

It’s an asset you can easily understand

Unlike shares, where you need to learn highly technical terms and get specialised knowledge, property is less complicated. It’s something that you can see and touch and it’s familiar to everyone.

Not only does property make simple sense, but the key data of relevance to make informed decisions is readily available to everyone.

Property gives you higher leverage

Depending on your borrowing capacity and the property you’re planning to buy, banks are likely to lend up to 90% of the value of the property. In contrast, you may only be able to borrow about 50% of the value of your shares portfolio - this is called margin lending.

This means that you don’t have to use all your money to grow your portfolio - you’re using the bank’s money to accumulate your assets at a lower interest rate

You can control the value of your property

By adopting strategies such as renovation, subdivision and development, you’re able to add value to your property without having to wait for the natural market cycle to move up, unlike other asset classes where there’s nothing you can do to change the value of your currency or shareholding.

You can negotiate on the price

Unlike shares where prices are fixed, you can always negotiate the price of property. You can also use reseach and contacts within the real estate market to find, negotiate below market price and make the purchase. All would be illegal when trading shares.

You get great tax benefits

Property allows you to claim investment expenses as tax deductions, making your payable tax lower. This makes investing in property more attractive and affordable for the everyday Australian.

If you sell an investment property that you’ve held for more than 12 months, you pay capital gains tax on only half of the profit.

You can claim tax against depreciation

Depending on the age of your property, you may be able to claim thousands of dollars from depreciation or the natural drop in the value of the physical property, as well as the fixtures inside.

This includes things like carpet, window coverings, range-hood and so on.

Eventually, you will have to replace those items as they deteriorate. But depreciation gives you a cash-flow helping hand in the early years of ownership.

Stability

Unlike the share markets where fortunes can change within seconds, the property market is more stable due to the time it takes to transact.

It takes around six weeks to settle on a property purchase on average and around three months to sell one. This reduces volatility and wild fluctuations in value and also tends to keep away short term speculators.

Finance options

It’s important to note that investment loans are different from an owner-occupied mortgage.

Lenders view investment lending as higher risk, so it’s more than likely that it will be at a slightly higher rate than a standard owner-occupier home loan.

There are also some other considerations that may be worth discussing with your financial planner or accountant, such as whether an interest-only mortgage might be suitable, meaning you can pay off more on your main home mortgage, or invest elsewhere. Or maybe a fixed rate is better for your budget and will give you certainty.

It’s also important to remember that when using an existing owner-occupied home with a mortgage as an equity release, the portion used to buy the investment property will need to be an investment loan and come with the investment loan interest rates.

Making the right decision on your investment loan can help you maximise the returns you make, so it’s important to have a discussion with me to provide unbiased advice.

Property investment specialists

If you’d like to invest in property, but don’t know where to start, then I can help. I have available a number of companies that deal only in investment properties. These companies are investment property specialists that consist of leading independent economists, utilising a comprehensive model to identify growth locations and investment opportunities. The data is used to identify areas Australia-wide that show the highest potential for capital growth and rental yield.

By utilising these experts, you can take the guesswork out of finding the right investment property.

Think of it this way; if you wanted to invest in the share market, unless you were qualified yourself in understanding the nuances of share trading, you would most likely utilise the expertise of a suitable qualified, and experienced stockbroker or financial advisor.

It is the same with investing in property. If you don’t want to spend your weekends at opens for inspections, and bidding auctions, just to miss out. Or worse still, negotiating with agents only to purchase a property that might not be the most suitable for renters, only to sell after a few years with the lack of capital growth.

If you’d like to explore these options, then let me know and I can facilitate a meeting with our panel.