We are passionate about growing your wealth. Whether you are a first time purchaser or sophisticated investor, we have the skills and expertise to meet your needs and execute the most complex of property investment transactions. We also specialise in refinancing and optimising existing loan portfolios to streamline your cash flow and put every dollar possible back into your pocket.
How do I know if property investing is right for me?
Property investing is suitable for clients who have:
- Surplus cash flow after covering their living expenses and current debts, and
- Saved a deposit or hold equity in other property.
You should also need to develop an investor’s mindset by understanding what to look for in an investment property, the risks of property investing, and how to mitigate them.
We do not recommend property investing simply to obtain a tax benefit or because someone told you to. You need to make your own enquiries to determine if it is right for you.
How can a mortgage broker help with property investing?
We can help you with:
- Determining your borrowing capacity
- Setting a property budget
- Calculating your required deposit
- Assessing available equity and arranging ‘cash out’
- Evaluating feasibility of multiple property purchases
- Developing your financing strategy
- Introducing you to our partners e.g. buyers agents, solicitors, depreciation & tax experts
- Holding you accountable to your goals
We can also help optimise loan portfolios for experienced property investors.
How do you optimise my loan portfolio if I am an experienced investor?
We can optimise your existing investment property loans by:
- Lowering the interest rates to achieve rate savings
- Fixing some of your loans to establish a period of certainty and hedge against rate rises
- Assisting with the release of equity for the purposes of future investment
- Removing any cross collateralization on your loans or guarantees
- Re-extending the loan terms or converting some loans to Interest Only where it makes sense to increase your monthly cash flow
- Conversely, switching your loans to Principal & Interest when you are earning enough income to start paying down your loans
- Make accessing your money more convenient by applying to a bank with more features or consolidating your loans with one bank.
Each client’s requirements are unique so please speak to us if you are looking to optimise your overall property portfolio.
How do I set an investment property budget?
This will depend on your borrowing capacity, available deposit, and individual goals. As these factors are unique to every client, we will need to assess your personal scenario to help you set an appropriate investment property budget.
What loan to value ratio (LVR) do you recommend for a property investment?
We recommend an 80% LVR for where you are new to property investing or purchasing in a slow market.
Borrowing above 80% LVR incurs LMI for most clients. We only recommend this for more experienced investors, where the purchase price is relatively low, the market is rising, and there is an opportunity too good to be missed, or if you are eligible for a waiver of LMI.
What is negative gearing?
Negative gearing is when your rental income is less than the total of all your investment property expenses leading to a net loss on your property and therefore an income tax deduction.
Typical investment property expenses include interest costs, council rates, water rates, property management fees, and maintenance and repairs.
Negative gearing makes sense when the capital gain on your property outweighs the accumulated after tax losses on holding the property each year. This is important as you will need to cover the loss each year from your savings or surplus income.
What is positive gearing?
Positive gearing is when your rental income is greater than the total of all your investment property expenses leading to a net profit on your property and therefore an increase in your taxable income.
Typical expenses are listed above.
Positive gearing makes sense when you are purchasing or holding a property primarily for an income stream rather than solely to make a capital gain.
What is positive cash flow?
A positive cash flow property is where there is a positive return on your property after factoring in your tax refund and, importantly, any non-cash based expenses like depreciation.
That is where your Rental Income less Property Expenses plus Tax Refund is a positive figure.
By definition, a positively geared property has positive cash flow. However, a negatively geared property can become positive cash flow after factoring in your tax refund.
Can i use the equity in an existing property to help me buy an investment property?
Yes. As long as there is sufficient equity, and you can demonstrate that you can service the additional borrowings, you are able to use the equity in an existing property to help you purchase an investment property.
If you are looking to do this, please contact us so that we can assess if this is feasible for you, and it can be structured in the right way.
What if i do not have enough deposit?
There is a minimum deposit you will need to simply secure the property and take it off the market. This is typically 5-10% for a seller to accept your offer.
If you do not have more than that, we can consider using a Family Guarantee if your parents have equity in the property. You can also consider paying Lenders Mortgage Insurance if you and the property you are buying are eligible.
With both these solutions, you must be able to demonstrate you can afford the higher loan repayments that come with a higher loan amount.
Can you recommend me a buyers agent for an investment property?
Yes, we have a panel of buyers agents and investment property firms specialising in different property types, geographies, and client profiles. Please contact us if you would like to be introduced to a buyers agent. We will recommend who we believe best suits your needs.
Should I get a pre-approval for an investment property?
Yes, we recommend seeking a pre-approval prior to looking for an investment property. This will allow you to know your limit and negotiate more strongly. Most buyers agents will only formally start looking for an investment property once you have a pre-approval.