Using Equity To Buy An Investment Property

Over the past few years, the Australian property market has been characterised by ever-increasing prices. Despite local and regional variation, in general, home owners across the country can be confident that the value of their bricks and mortar has increased significantly over time. As a result of this, many people are discovering that they could well have equity in their property: the sale value, should their home be put on the market, would exceed the original purchase cost plus any outstanding mortgage payments. A growing number of Australians are using equity to purchase investment property. If you’ve got property equity available, take a look at some of the advantages investing it could bring.

Make your money work for you

If you decide to invest in a rental property, your equity could be earning up to 25% of its value each year through your investment. With the correct planning and appropriate professional advice, using home equity to buy rental property can be a straight-forward and rewarding procedure. If you’re considering the purchase of an additional property using property equity, the first thing to do is to get your property valued so you have some idea of the total amount of equity available. Once you know this, you can begin to work out how much of that equity you would be comfortable releasing, which in turn gives an idea of what your investment budget might be.


Finding the right property is essential

Whilst the answer to the question, “Can you use equity in one house to buy another?” is usually, “Yes”, it’s always worth consulting with your financial provider to check that you would, in principle, be suitable for equity release products. Once you’re clear that buying investment property with equity is possible, given your individual circumstances, it’s time to start investigating the market to find something suitable. Due to the problems which can result from selecting the wrong investment, careful consideration of what’s available is essential.

Local property knowledge really helps

When you come to buy, it’s worth remembering that average figures for prices across a city may well mask significant local variations. In addition, what at first sight appears an inviting purchase may be difficult to let or tend to attract only short-term tenants. The type of property can also be important; buyers also need to be able to anticipate what effect construction trends will have on future property values. Research is vital if you want to maximise the chances of making the right choice.

The complexities of the Australian property market mean that having the right information at your fingertips is crucial when it comes to deciding how best to invest the equity in your home. If you’re not sure where to go for the facts you need in order to make the right decision, we can help. With a wealth of experience in the property market in Melbourne and Brisbane, we’re ideally placed to assist investors wishing to take advantage of the fantastic property investment opportunities available in the area. Find out more here.