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It’s possible for everyday Australians to invest in property

Property investment is possible for anyone, not just the mega-rich. Everyday Australians with equity in their homes have already taken the first step, and the next is surprisingly easy despite how it may seem.

Let’s have a look at the simple logistics of taking the first steps towards investment with the goal of making your property aspirations a reality.

Using equity as leverage

If you’ve built up equity in your home, either through capital gains or mortgage repayments, you might have a fairly easy ride to buying your second home. Using this equity to place a deposit on another property is doable, but most banks will require that you still have 20 per cent equity in your original home.

There may be several logistical hoops to jump through, so hiring an experienced mortgage broker can make the entire process less confusing.

 Balancing rental yields and capital gains

When you’ve secured loan pre-approval and are ready to buy your investment property there are two key considerations:

  1. The potential it has for capital gains.
  2. The rental yield of the property.

Maximising these two is ideal, but often investors will settle for one or the other. Smart Property Investment lists NSW suburb Bodalla as one of the most lucrative in Australia, with a median value increase of almost 50 per cent over the last year. Victorian suburb Flinders saw a similarly impressive gain.

The moral of the story here is – open your mind, do your research and buy based on logical decision-making (not emotion) and you may find a capital gains gold mine.

Rental yields are an important consideration for new investors, particularly those paying a mortgage near the edge of their repayment capacity. Find a property with a high yield and you may be able to cover your entire second home loan with rental income, making your mortgage repayments easier to manage.

 Structuring your finances

Getting your second mortgage is a big step so it’s essential that you choose a home loan product that is perfectly suited to your needs. Speak to us today and give yourself the peace of mind knowing that you are getting the right loan, which is suited to your needs right now.

Written by

Stephen Bonfield, the Managing Director, previously worked for one of Australia’s major home loan companies as an independent mortgage broker. Steve used this experience to set up his own mortgage broking company - a company that places customer needs at the forefront.

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