Many people in Australia have built their wealth on bricks and mortar, armed with the knowledge that residential real estate has the power to deliver regular and tax-friendly returns with long term capital growth.
Planning to invest
The key to success when investing in property is planning, including taking the right amount of time to prepare and getting the right advice. Before you start looking for an investment property, there are a few things you need to consider about your financial situation:
• What are your financial goals and future plans?
• Where are you headed?
• How much money will you need?
• What is your maximum borrowing capacity?
• How will you pay for the deposit and purchase costs of the property?
Sorting out the finances
How you will finance the purchase of your investment property is one of the most important considerations in planning to invest. Things to think about include:
• Your maximum borrowing capacity: Your borrowing power is typically based on a number of factors, such as your income, financial commitments, credit history, savings, employment history and assets. Check out our simple borrowing capacity calculator for a rough estimate of your borrowing capacity.
• How you can use your existing home: If you have good equity in your existing home, you might be able to use this this instead of a cash deposit.
• Apply for pre-approval: This will help give you a clear idea of the price you can afford, help you better focus your property search and show real estate agents that you're serious about buying.