5 Guidelines on Buying Property

5 Guidelines on Buying Property
Today's market conditions favour property investors who are looking to benefit from ongoing seller discounting, healthy rental income growth and longer term capital gains. For those considering investing, here are hints and tips from Australia's largest independently-owned mortgage broker Mortgage Choice:

1. Aim long-term: The market moves in cycles; it has highs, lows and steady patches. Always ensure you are comfortable with the possible pros and cons of an investment asset and think hard about how they match your goals. You will need to budget for interest rate rises and property agent fees as well as the usual ownership costs and lost rent if you struggle to find or keep a tenant.

2. Choose a well suited loan: There is most probably a range of property loan products to weigh up against your financial situation and investment portfolio strategy. Interest only or principal and interest loan? Fixed or variable rate or perhaps a split? Which features are needed? Cash deposit and/or equity? A professional mortgage broker can help you compare a range of home loans and guide you through narrowing it down to one suited to your requirements and objectives.

3. Research the gains: Read property-related and investment articles. Talk to people in the know, eg. experienced investors and property research companies, about areas you are contemplating buying in. Compare suburbs' rental yields, resident demographics, tenant demand, existing and planned infrastructure, past price growth and predictions and everything in between.

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4. Invest with equity: Tapping into another property's equity can be a strong launching platform. Say your home is valued at $700,000 and the mortgage is $350,000, you may be able to invest up to 95 % of your equity ($332,500) to purchase a property, depending on factors such as your lender's approval criteria and your ability to afford repayments. Lenders Mortgage Insurance may also be a cost consideration.

5. Meet an expert: Buyers' agents know the market and can be a valuable resource to use for advice or for negotiating with sellers and their agents. You may also need to discuss your move with an accountant or financial planner. Make sure your financial situation is improved by the investment.

5 Guidelines on Buying Property

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