If you are already a home owner, you may not need to provide a deposit to fund the purchase of an investment property.
Instead, using equity to invest in property may be a strategy that’s available to you. The property that you live in is not the only source of equity. You can also use the equity in an existing investment property to help buy another investment property.
The equity release model
This model allows a borrower who already has his or her own home or investment property to use equity in that property (commonly your own home is often referred to as your principal place of residence) by unlocking this money (‘equity’). Using equity to buy your first investment property is easy with the help of a professional broker.
Structuring the loan
Releasing equity from your home in a structured way allows you to keep your savings in the bank. Most investors want to combine the benefits of not using their own savings with tax minimisation advantages when buying an investment property. So keep in mind you should be working through this with your experienced mortgage broker to get it right to allow you to keep investing.
Many property investment gurus say it is important to repay the loan on your home as soon as you can. This is because there is no tax advantage to having money owing on your home mortgage like there is on an investment mortgage. For this reason it may not be a good idea to use your re-draw from your home loan to finance your investment property, and instead use the equity that is drawn from your home to purchase an investment property.
Your EasyPlan broker can help you work out how much equity you have in your property and how it can be accessed as a source of funding for your first or next investment property. Call our friendly EasyPlan team on 02 4207 3110 or make an enquiry today.