- By admin
- In Building wealth - Finance for investors, First things first - Steps before applying for finance
Wondering whether you should buy a second property, or continue paying extra on your existing mortgage? Of course you should always consult with your accountant or financial planner to assist you with this question.
But here are some things to consider-
Property prices tend to double every ten years. Though it’s not always at a steady, even pace, the fact is that you wont find a property today for less than what you would have paid ten or fifteen years ago.
If you have had your property for several years, or you have been making extra repayments, you could have enough equity to cover the deposit and stamp duty for your second property.
Once you know how much your repayments will be on your next mortgage, and you’ve researched how much rent you should expect to receive for your new property, you can then determine how much a second property will cost you per week. This could be on average from $100.00 to $200.00 per week for an investment property around $500,000.
You can also choose to make interest only repayments on your investment property, in order to reduce your monthly repayments. This wont reduce the principle amount owing on your new mortgage, but whilst your property is tenanted, and most of the mortgage is covered, your property value will continue to rise over the next 10, 15 years, and so on. If you were to do this several times over, than the result after several years, will be hundreds of thousands of equity owned by you.
You can at any time elect to change your payments back to principle and interest, or to sell any of your investments and cash in on the increased sale price.
If you would like to know how much you can borrow for a second property, and how much you will need by way of deposit and stamp duty, contact Sydney based Bee Finance Savvy on 1300 140 554 or email us at email@example.com
We can help you determine your borrowing capacity, obligation free!
You can than use this information, to have an informed discussion with your accountant, should you choose, based on your true borrowing capacity. After all, banks do not calculate your borrowing capacity by simply subtracting your expenses from your income. They have a range of formulas available which vary from lender to lender.
Speak to one of our accredited finance brokers today, as you may require some planning ahead, to get you prepared for your new property portfolio.
You may also enjoy further reading here – Want to buy a business, don’t make these mistakes.