Residential Investment Loans

You have the option to utilise the equity in your home to fund the down payment on a new property by using your existing property as collateral. This can be an effective way to take the first step into the property market, as leveraging equity is typically easier than saving for an entirely new deposit. Learn more about how you can use your equity to purchase another home.

Investing in property is a popular choice for many Australians, as it is easier to understand compared to other forms of investment such as shares, bonds, and ETFs. Home loan rates are currently at record lows, and you can utilise your home’s equity to finance your property investment.

Some benefits of purchasing an investment property include:

1. Potential tax benefits for property investors
2. Potential for capital growth
3. Relatively stable investment
4. Opportunity for passive income

When you buy an investment property, you may encounter the term “negative gearing”. This refers to borrowing money to invest.

If you borrow to make an investment, it can be either negatively geared – when interest repayments exceed net income, or positively geared – where net income exceeds repayments.

Negative gearing means that the cost of owning an investment property is higher than the rental income it generates. For example, if your rental property earns $25,000 in one year and the expenses of owning the property (loan repayments, body corporate fees, maintenance, etc.) are $30,000, you will have a loss of $5,000, which you can claim as a tax deduction.

One benefit of negative gearing is the ability to claim tax deductions and reduce your taxable income. Additionally, a negatively geared property investment may appreciate in value over time.

It’s important to note the risk involved in negative gearing because you are losing money. You’ll need to be aware of this to budget and prepare for the losses.

To calculate the profitability of an investment property, you can use either the weekly or monthly rent to determine the annual rental income. After that, subtract the annual costs. Divide this total by the property’s purchase cost and multiply by 100 to get a percentage. This will give you the rental yield, which helps you assess the return on investment.