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Investing in Property
Property investment remains a favored strategy among many Australians for building wealth. Historically, it has been a relatively stable long-term asset, providing substantial returns. To maximize the benefits of your property investment, securing the right financing is crucial. That’s where your Loan Easy broker comes in.
Why is Property Investment Popular?
Investing in property is popular due to the long-term appreciation of house prices, which often leads to significant returns. Additionally, properties can generate regular rental income and offer tax advantages, making them an attractive component of a wealth-building strategy.
Differences Between Investment Property Loans and Owner-Occupier Loans
Investment property loans differ from owner-occupier loans in a few key ways. Typically, investment loans have higher interest rates due to the perceived increased risk. If you already own a property, you might be able to use its equity to help fund the deposit for your investment property.
Interest-Only Loans for Investment Properties
Many investors opt for interest-only loans, where repayments cover only the interest for a specified period. During this time, the principal amount remains unchanged. After the interest-only period ends, the loan reverts to principal and interest payments. Although interest-only loans often come with higher interest rates and result in higher overall costs, they can be beneficial for maximizing tax deductions or temporarily reducing expenses.
Developing a Smart Property Investment Strategy
A successful property investment strategy depends on your unique circumstances and goals. Key considerations include the duration you plan to hold the property, the amount of capital you can invest, and whether rental income will cover your expenses. Crafting a well-thought-out strategy can help ensure your investment pays off.
Deposit Requirements for Investment Properties
The deposit required for an investment property varies based on the lender and the property value. Generally, a 20% deposit is needed to avoid paying lenders mortgage insurance (LMI). You can also use the equity in an existing property as part of your deposit.
Using a borrowing power calculator can help you estimate how much you might be able to borrow. Your Loan Easy broker can provide a detailed analysis of your borrowing power and potential repayment amounts, helping you set up your investment property for success.
With the right guidance and financial setup, property investment can be a rewarding addition to your wealth-building portfolio. Let your Loan Easy broker assist you in navigating the process to achieve the best possible outcome.
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