Property can be an important part of many investment strategies, but purchasing an investment property requires careful planning.

Before making a decision, it’s important to consider your borrowing capacity, loan structure, cash flow, property costs and overall investment strategy.

Understand Your Investment Goals

Start by understanding why you want to purchase an investment property.

Are you primarily looking for rental income, long-term capital growth, diversification or a combination of different objectives?

Having a clear strategy can help you determine what type of property and finance structure may be appropriate for your circumstances.

Know How Much You Can Borrow

Your investment borrowing capacity may be affected by factors including:

• Your income
• Existing home loans
• Other debts
• Living expenses
• Credit history
• Deposit and available equity
• Potential rental income
• Lender assessment policies

Different lenders can have different lending criteria, so comparing your options can be valuable.

Consider Your Deposit and Equity

You may use savings as a deposit, or depending on your circumstances, you may have available equity in an existing property.

Using equity can help with purchasing another property, but it also increases your overall borrowing.

It’s important to understand the impact on your repayments and financial position before proceeding.

Think About Cash Flow

An investment property comes with ongoing expenses.

These may include:

• Loan repayments
• Property management fees
• Council rates
• Insurance
• Maintenance
• Repairs
• Vacancy periods
• Other property-related costs

Rental income may help offset some expenses, but rental income isn’t guaranteed and property costs can change.

Choose a Loan Structure Carefully

Investment loans can have different structures and features.

Depending on your circumstances, you may consider options such as variable or fixed rates, principal and interest repayments, or interest-only structures.

The right option depends on your financial circumstances, investment strategy and lender requirements.

Compare Your Lending Options

You don’t necessarily have to stay with your current bank when purchasing an investment property.

Singh Loan & Finance works with a range of lenders, giving you the opportunity to explore different lending options based on your circumstances.

Planning Your Next Investment?

Buying an investment property is a significant financial commitment and should be approached carefully.

Before making a purchase, understand your borrowing position, potential costs and loan options.

Speak with Singh Loan & Finance to explore your property finance options.