Here are some tips to consider before taking the plunge, from financial products and services provider, Liberty
Making the decision to buy your first investment property is an exciting yet daunting venture, says financial products and services provider, Liberty.
According to RP Data and Census Data only 7.9 per cent of Australians have purchased an investment property.
Providing you plan it right and take into consideration all the relevant financial factors, buying a property as an investment doesn’t have to create unnecessary anxiety.
So here are some tips to get you started.
1. Sort out your finances
The very first thing to do is figure out how much you can borrow. How much you have in savings to put towards a deposit will be relevant. Your income and existing financial commitments will also be significant factors in determining what loan amount you can comfortably repay. Liberty has helpful online calculators that can assist you to crunch the numbers so for more information click here Liberty home loan calculators. However, you can also contact a mortgage broker ‘Our Advisors’ who can also do this for you as well as guide you through the different investment loans available.
2. Should you get pre-approval?
Getting pre-approved for your investment loan is a smart move but it is important you understand any conditions. A typical pre-approval will be subject to a satisfactory valuation. This is so the lender can check that the property you are looking to buy meets their guidelines and is an acceptable security for the loan. A good idea is to make any offer to buy property “subject to finance approval”. That way, you’re not committed fully to the purchase until you know your loan is unconditionally approved. A handy online pre-approval tool that can help you get started is here loan insight tool.
3. Consider what and where to buy?
Choosing the right investment property requires a lot of research and it is important to establish early how the investment fits in with your larger financial plans. Your financial adviser can help guide you around what type of property investment might best support your overarching financial goals. Obviously if you are looking to buy a commercial property in order to get the higher rental yields, this means looking in different areas compared to if buying a more traditional family home or unit in the suburbs. There are many useful websites such as Domain that can help you track and monitor property sales in different areas.
4. Owning and managing the property
Owning an investment property is costly. You may be up for expenses such as council rates, body corporate fees, insurance, property management fees as well as costs to cover any repairs and maintenance. If you’ve obtained finance to purchase the property you’ll also have mortgage repayments to cover each month. Budgeting for these expenses in your pre-planning phases can help avoid nasty surprises once you own the investment.
Article published by The Real Estate Conversation 7 March 2017.
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