Home loans for Perth property investors.
You may be wanting to buy a second home in Perth as an investment property. Or you may be buying an investment property in another state. Perhaps you are investing as part of your retirement plan.
Whatever your motives, property investments can be a great way to create wealth, through capital growth, rental income returns and tax advantages with negative gearing.
Remember, it is essential that you view an investment property as a long term proposition. Prices rise and fall over time so you must look at the long term. Talk to a Perth Mortgage Broker and understand your options.
Capital Growth
When your property increases in value, that increase is called capital growth. It is, in effect, a profit. If you were to sell the house you would get more than you paid for it. Capital growth is also tax free.
Negative Gearing
This refers to when your borrowing costs exceed the income from your investment property. Negative Gearing can offer tax benefits by allowing you to deduct your borrowing costs from your total income, provided that all investments are genuine.
But as with any investment, Negative Gearing can be complex and there is a risk that you may make a loss. If you were forced to sell the house because you can't keep up repayments, you may make a loss.
What makes a good investment property?
When buying an investment property, Leave emotion out of the equation and focus on the growth potential of the area. Look at the services in the area such as schools, public transport and shops. In Western Australia, properties near to the coast, or close to the beach are always in demand.
Buy what you can afford. Look at the rents you may be able to charge and the chances of capital growth on the property.
Start thinking about your investment property today. Contact Your Local Finance Broker on 1300 787 665.
Home Loans for Investment
There are many options when choosing an investment home loan. It is always best to get several different home loan quotes before making your decision. So whether you are investing as part of your retirement plan, or to take advantage of tax savings, there will be a home loan to suit your needs:
- Variable Rate - Principle and Interest
Variable rate home loans are a good option for your investment property as long as it is a residential property. You will be required to make the minimum repayments set each month, for an agreed term which is usually 30 years. Variable home loans offer you the flexibility to make extra repayments and withdraw at a later stage.
- Variable Rate - Interest Only
Interest only home loans are becoming increasingly popular. This home loan works by allowing you to only pay the interest each month. This means monthly repayments are lower which is attractive to some home buyers. The interest only payments lapse after a set period of time - usually up to five years - and your loan will convert to a normal principal and interest loan for the remainder of the loan term. Extra repayments and redraw facilities are not usually a feature on this type of loan.
- Line of Credit
Line of Credit loans allow you to draw money against the equity in your property. Usually you use a credit card or cheque. Many people use this to purchase a second property as an investment. A limit will be set as to how much you can withdraw and usually repayments can be flexible. Many borrowers find this type of loan attractive as you only pay interest on the funds you’re using (not the total limit of your facility). Make sure you get the highest returns from your investment property portfolio by working closely with a Mortgage Broker Perth.
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