When it comes to investing in property in Australia, there are a few things to consider. It is essential to cover maintenance, insurance, property management, municipal and water rates, land tax, and corporate fees (if applicable) in addition to your interest payments if you apply for a loan. Lenders are stricter than they used to be and require a minimum of 20% deposit. If you don't have the saved deposit, full financing of the purchase price may be an option by using your rental history as proof of savings or having a parent become a guarantor, but this comes with more risks and requires full insurance.
To get a mortgage loan in Australia, you need to make a cash deposit of around 10-20% of the value of the property. If you want to avoid paying lender mortgage insurance (LMI), you'll need a 20% deposit. Low-deposit home loans are available, but your mortgage insurance will be much higher and you may be asked for more details about your personal finances. Some professions offer no-deposit or low-deposit loans, such as doctors, but this isn't an option for most people. A larger deposit (20% or more) translates into lower interest payable during the life of the loan.
Some lenders will also give you a lower interest rate if you have a larger cash deposit. We have seen that there were very few properties left on the market after price increases a year ago or so, and only recently have homes come back on the market. A mortgage is a huge financial responsibility, and it's best to have an honest conversation with your accountant to determine how much you can afford. These properties will provide investors with the opportunity to increase their income and accumulate their wealth until they are ready to buy a home of their own. It is advisable to get pre-approved for a loan before beginning your search for an investment property. This way, you'll have a better idea of your ability to borrow and will find it easier to purchase an investment loan if you first get accredited prior approval.
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