Using the equity in your own home to purchase an investment property could be easier than you think
The recent surge in property values across many parts of the country has meant that many home owners – even those who have not been in the market for that long – are finding themselves with large amounts of equity in their properties.
If you have always considered investing in property but don’t know how to start, now is the time to learn. Rather than saving up for years for a deposit for an investment property (those funds may be better used reducing personal, non-tax deductible debt) why not use your equity and get started now?
The first step would be to have your mortgage broker or lender organise a bank valuation of your property. This will give you an exact figure of how much more you may be able to borrow against your home. These funds will form your deposit for the new purchase, and you will obtain another investment loan secured by the new property for the bulk of the funds.
Often, the bank can do a desktop valuation of your property – which means the valuation amount is based on recent sales in the area of comparable properties and the growth in your area since you purchased. You may not even need to have a valuer come out to your home to inspect it, and in some cases you could have the valuation amount the same day.
Once the valuation is completed, the next step is to contact your broker who will prepare an application to access the funds from your equity to use as a deposit. Your broker will arrange a pre-approval that is valid for 90 days so that you can start shopping for your investment property.
Why not call your broker to discuss financing your next investment property, or if you don’t have a broker make a free appointment to see your local Aussie Mortgage Broker.
Our free Property Investing Ebook might also provide some other useful tips.
Did you recently buy an investment property? How did you come up with your deposit?