Now that you’re on the property ladder, we’ve got some tips on how to keep climbing to the top.
Buying a new home is a huge step, and perhaps one of the biggest you’ll make. But for some of you, it won’t be the only property investment you make. We look at how you can buy a new home without selling your old one.
Can you afford to invest in property?
Property isn’t a cheap investment. If you’ve got a mortgage, your disposable income is reduced by monthly repayments. And of course, signing on the dotted line brings with it some hefty expenses: stamp duty, bank fees, insurance, and so on.
Generally speaking, if you have a mortgage, you’ve got less disposable income than someone who is renting. However, if you have steady rental income and some savings, you’re not in bad shape.
Investment property pros and cons
Property investment is an attractive option for many. It is generally a long-term and less volatile option compared to other financial investments, such as shares, and with it comes a few benefits. These include the ability to offset a lot of your property expenses by way of tax deductions, and your investment property’s value will hopefully increase over the years.
Meanwhile, if you have a tenant, the rent they pay will go towards paying off the property – though be prepared to fork out the difference if the mortgage repayment is higher than the rental income, which means your investment is negatively geared.
Home owners are likely to build up equity after a few years of ownership. If that’s the case, your increasing equity can be put towards an investment property. Even better, the equity you build up in an investment property can be used for a future property investment.
There are tax benefits to discuss with your accountant about this form of leverage.
Your financial adviser can give you guidance on your financial position. The risk with having multiple mortgages is keeping up with all of your payments.
Meanwhile, a mortgage broker can help you arrange your finances for maximum efficiency. When approaching a new investment, you might need to think about refinancing your existing mortgage, and finding the right deal/s for your new property investment portfolio.
Engaging a professional mortgage broker early in your property journey can help to set yourself up with the right loan structure/s to help you achieve your goals longer term.
Have you been able to climb the property ladder? Share your experience in the comments below.