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Essentials
What you need to know
when buying and financing
your investment property

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 CONTENTS
WELCOME PAGE 3 COSTS
Stamp duty
OVERVIEW PAGE 4 Loan application fee
Legal
PURCHASING YOUR Inspections
INVESTMENT PROPERTY Insurances
Why investing in property may be the answer
Land tax
Do your homework
Taxation - positive vs negative gearing APPLYING FOR A LOAN
LOAN APPROVAL
GETTING STARTED PAGE 8
PROPERTY MANAGEMENT
FACTORS TO CONSIDER
BUYING YOUR
FINANCE
INVESTMENT PROPERTY PAGE 18
Using equity to buy your investment property
Buying an investment property through a A STEP BY STEP GUIDE
superannuation fund STEP 1 - Have your loan pre-approval in place
STEP 2 - C hoose the right property in the
CHOOSING THE RIGHT LOAN
right location
Interest only loans
STEP 3 - Make an offer
Fixed rate loans
STEP 4 - Conveyancer/legal representative
Basic or “no frills” loans
STEP 5 - Final loan approval
Standard variable rate loans
STEP 6 - Insurance
Line of credit loans
STEP 7 - Final inspection
Professional loan packages
STEP 8 - Settlement
BORROWING ESSENTIALS STEP 9 - Appoint a property manager
Credit reference If something goes wrong
How much can I borrow? Know your limits
What deposit will I need? TIPS FOR PURCHASING YOUR
Deposit bonds SECOND AND FUTURE
Should I buy with someone else? INVESTMENT PROPERTIES PAGE 20

OUR COMMITMENT TO YOU PAGE 22

2
WELCOME
Thank you for taking the time to read about the Buying real estate, whether you are buying the
process of buying your investment property family home or an investment, is one of life’s
and obtaining finance. This guide is designed most important financial decisions. However,
to help you through the process to ensure when buying an investment property, it is wise
nothing is missed and that many of your to remember that you are making a business
questions are answered. decision. You are not buying from the heart,
but from the head. You are buying the property
Property has been considered a popular path because you expect it to appreciate in value
to wealth for Australians for many years. and give you a financial return.
Buying their own home is often the first
significant investment most people make. When investing, it is important to assess your
Purchasing another property may well be the current financial position. What are your cash
second - even before shares and other assets. reserves and what equity do you have in
However your first investment in property need your present home? Look at your long term
not be your home. Buying a rental property can objectives. For example, will the property be
be a good way to gain some capital growth that part of your retirement financial plan? Potential
can be used later to help buy your own home. changes to your current situation should also
be factored in, such as the birth of a child, the
Sensible investments in property have many loss of one income or supporting parents in
attractions. Property can be less volatile than their later years. It is wise to seek advice from
shares and it tends to be regarded as a safe an investment adviser or qualified financial
haven when other assets are declining in planner to help determine your financial goals
value. Property has the potential to generate and strategies.
capital growth (an increase in the value of your
asset) as well as rental income. There are Please call the office for more information or
also tax advantages associated with negative clarification about your own circumstances and
gearing. your future property investment potential.
Why invest in property? Because you want We look forward to helping you purchase your
to avoid at all costs the dependency on the first and hopefully, many future investment
government pension at retirement, or the false properties.
reliance that compulsory superannuation will
be enough to support you in your retirement.
Kind regards

The Team at x

3
 OVERVIEW:
PURCHASING YOUR INVESTMENT PROPERTY

Why investing in property Do your homework

may be the answer First you need to work out how much you
can borrow. This is where our services will
Australia currently faces a chronic housing really help you. Make sure you have an
shortage which, coupled with a rapidly accurate and detailed budget that takes
expanding population (through natural increase into account all expenses associated with
and immigration), has pushed rental vacancy purchasing a property including stamp duty,
rates to historic lows and put upward pressure council rates and other fees. Ensure you
on rents. There are simply not enough houses go to many open inspections and do your
to go around. research on the internet before purchasing
An investment plan is one that works towards to ensure you have a good indication on
building your wealth and securing your property prices in your desired location. Find
financial freedom. For some, the future may out the area’s average rental yields and the
seem a long way off, but the time to act is services infrastructure in place and planned.
now because the future waits for no one. The Also research the property price growth that
housing market is generally a seven to ten has been experienced and what is expected.
year cycle: there are always highs, lows and Invest the time to fully understand the market
steady patches. - it could make a big difference to future
investment returns.
The decisions you make today will determine
the lifestyle choices you have in the future. A mortgage is a big commitment and you
may have to make changes to your regular
The following factors should be taken into spending practices if you are to meet your
consideration when purchasing property as repayments with ease. Include water and
an investment: council rates and items such as insurances
and maintenance in your planning phase.
• The likely return - yield and capital growth
Don’t forget your property management fees
• Buying and selling costs
if you are considering having your property
• Cost to borrow money, ie interest rates
professionally managed. Your accountant
• How attractive the property will be for likely
may also take the opportunity to charge you
tenants or future buyers.
more for the extra work in preparing your tax
return. However a good accountant is worth
their weight in gold.

4
 OVERVIEW

Interest rates move constantly, so you Every property will have compromises, but
will need to allow room in your budget for don’t miss a good opportunity because you
interest rate increases and other unforeseen are waiting for the ‘perfect’ house or apartment.
additional spending. When interest If it sounds too good to be true, it probably is.
rates drop, simply maintaining the same
repayments is one of the fastest ways of Your selection criteria should include:
paying off more of your loan and building a • LOCATION: is it close to schools, shops,
buffer if they rise again. day care and sporting facilities?
Think very carefully about the different • Transport: is it close to bus stops and
loan product offerings available and how train stations?
these relate to you and your spending and • Demographics: especially population
saving habits. Consider options such as an numbers, growth and density.
offset account that will enable you to take • Suitability to rent: are the rooms big
advantage of using any excess cash to save enough and are there usable living spaces
on interest. It’s also a great account to use to inside and outside and other features such
save for your next investment property. as garaging and storage?
• Future potential: can the property
Plan ahead - you may find a long-term tenant be renovated or developed? Are there any
or you may find that your tenants come and plans to develop surrounding properties,
go. Make sure your cash flow is sufficient to eg high density dwellings?
cover the mortgage and other outgoings if • Affordability: stay within the second
the property is empty. Don’t think that you and third quartile of prices in the suburb for
always have to increase the rent either. price and rent.
Sometimes it is more cost effective to have
the same long-term tenant in your property
than have weeks of vacancy trying to achieve
a higher rental yield.

5
 Taxation - positive vs Once you have researched your investment
property, you will then need to decide on the
negative gearing gearing strategy that best suits you. This will
be determined by your financial circumstances,
Even with an uncertain economy, rental yields retirement strategy, the level of your deposit,
are still expected to continue to increase in equity available, surplus monthly cash flow
most capital cities. (income less expenses) and your acceptable
level of risk. These considerations will clarify
As the population in these cities continues to
whether negative gearing or positive gearing
grow, demand for housing will also increase.
strategies are most appropriate to your situation.
However with the recent economic conditions
this increase in demand has not been SO, SHOULD YOU HAVE POSITIVELY
satisfied with an increased supply of housing, OR NEGATIVELY GEARED PROPERTY
resulting in a shortage of housing stock. INVESTMENTS?
Falling vacancy rates and higher rents have
made it more difficult and expensive to find Here’s a brief description of both gearing
rental accommodation. strategies to help you identify with the
possibilities of each.
Like all good investments you first need to
consider the property to be purchased. As with Positively geared properties are when
all property investments, location is the key the rental return is higher than your loan
consideration. Generally properties located repayments and outgoings. Positive cash flow
within 20kms of the CBD with good train, bus properties are self funding and are considered
and freeway access will offer stronger returns. to be a conservative investment strategy that
provides an income with exposure to the
prospect of capital growth.
Bear in mind that with positive gearing there is
the potential that tax will be payable on the net
income (after the consideration of depreciation
and other tax deductions).

6
 OVERVIEW

Positive gearing is beneficial when an Ultimately most investors will aim to be

individual does not have surplus cash flow positively geared in the long run. Generally
to fund income losses during the ownership high tax payers choose the negatively geared
period or other income to offset losses. investment option to maximise their tax
returns and benefit from the long term capital
Negatively geared properties are when the growth potential. Investors closer to retirement
rental return is less than your loan repayments or in a lower income bracket may choose
and outgoings (placing you in an income loss positively geared investments to maximise
position). There is however the underlying their income potential.
expectation that the accumulated losses will


be more than offset by the capital growth on Feel free to call the office or ask your
the property. In this circumstance the rental accountant to calculate the various
return is not considered as important in the loan to income ratios that may help
decision process. you decide which gearing option is best suited
to your individual circumstances. As always
The key benefit associated with negative it is best to seek professional advice before
gearing is that the loss associated with the proceeding with any investment strategy.
property ownership can be offset against other
income earned, reducing your assessable tax
income, thereby reducing your tax payable.
The result is that the cost of owning the
property is being funded by your tenant
(in the form of rent), the tax office (in the form
of tax savings) and your surplus cash flow. Even with an uncertain
economy, rental yields
are still expected to
continue to increase in
most capital cities.

7
 GETTING STARTED:
FACTORS TO CONSIDER

FINANCE 20% EQUITY - represented by the orange

section of your home. This is the safety net
Using equity to buy your that lending institutions like to have as their
safeguard against the borrowings on your
investment property home. This is unable to be touched unless
you want to pay LMI (Lenders Mortgage
Many Australians are now tapping into their Insurance).
“pot of gold” - the equity in their home -
allowing them to invest for the future and forge In this example 20% equity of $500,000 is
ahead financially. $100,000.

Tapping into your home equity (or equity REMAINING EQUITY (what you’ve already
from another investment property), is a repaid on your loan or gained through capital
great launching platform for buying an growth on the property) - represented by the
investment property. Say your home is green section of your home.
valued at $500,000, you owe $150,000 on Diagram 1 shows that the remaining 50% of the
your mortgage (thereby giving you equity of value of the home is available to use as security
$350,000) you may want to invest a portion for other purchases. To access this remaining
of the equity into another property. equity to purchase an investment property, there
Diagram 1 illustrates the financial components are two options: (A) establish a line of credit; or
of your home: (B) apply for a standard term loan with a redraw
facility or an offset account where the remaining
EXISTING BORROWINGS - represented equity amount can be invested until required.
by the blue section of your home. This
loan amount (unless used to purchase Usually the existing loan and the new portion
an investment property) is not usually tax of the loan would be refinanced; however it is
deductible. common to split these in order to keep the non
tax deductible amount clearly differentiated
If your home is worth $500,000 and you from the deductible investment amount. Your
have $150,000 remaining on your loan, your accountant should be able to help with this.
existing borrowings would represent 30% of
your home value. In this example, $250,000 is 50% of the
value of your home available to purchase an
investment property.

8
 GETTING STARTED

When you do find the investment property Then all you need to do is sit back and let
you want to purchase, you can fund the the property take its course with capital gains
acquisition with: generating some additional equity over the
next seven to ten years, as it has proved to do
(A) A new loan for the investment property so (even in tough times) over the last century.
(typically 80% of the purchase price to
avoid LMI). This $400,000 loan (based on a Once you learn this strategy you can repeat it
$500,000 investment property) is represented as often as you want, provided you can repay
by the grey section of the investment property the borrowings.
in Diagram 3. Plus,
(B) Part of the green remaining equity in your Buying an investment
home. The remaining 20% of the purchase
price (usually representing the deposit) plus
property through a
stamp duty, conveyancing costs and other
associated expenses can be taken from this
superannuation fund
equity. In the example it would require you Did you know that you can now use your self
to draw $120,000 (assuming $100,000 [20% managed superannuation fund to buy an
deposit] and $20,000 [5% total acquisition investment property? You will need to consult
costs*]) of the available $250,000 (represented your accountant or financial advisor with
by the yellow section in Diagram 2) leaving regards to:
$130,000 of the remaining equity. This could
• What you can and cannot do in a self
also be used to purchase an additional
managed super fund (SMSF)
investment property if serviceability allowed or
• Benefits of using a SMSF to buy a property
you could use this equity to fund any shortfall
• Challenges and pitfalls
in your new investment loan repayments.
• Using the correct trust structures
The tax man (through tax rebates) and your • How to correctly source and set up
tenants (through rent) help pay for the investment the finance
loan, however sometimes there is a shortfall that • How to buy an investment property
needs to be serviced. This should be taken into through a superannuation fund.
account when borrowing to ensure that the loan
on the investment property can be serviced within
your budget and should include some margin for
any unexpected interest rate rises.

9
Disclaimer: *Acquisition costs vary in each state. For demonstration purposes only, we’ve assumed 5%.
 CHOOSING THE Fixed rate loans
RIGHT LOAN These loans are set at a fixed rate for a
specified period - usually one to five years.
Ideally, investment property loans should Repayments do not rise or fall with interest
be interest only because an interest only fluctuation throughout the specified period.
investment loan is FULLY tax-deductible. At the end of the term you can lock in another
It is usually the best cash flow solution when fixed rate, switch to variable or go for a split
used with good capital growth. However loan. These loans may have limited features
there are other categories of loans that may and lack the flexibility of variable loans. There
be considered. may be early exit fees and limited ability to
make extra payments.
Interest only loans
With an interest only loan your repayments
Basic or “no frills” loans
are set to cover the interest component of These are variable rate loans with a
your loan only, which allows you to keep your relatively low interest rate. Repayments will
repayments on your investment property to a rise and fall with interest fluctuations. With
minimum. Generally, interest only loans are for these loans, remember to check that the
a maximum five year term (depending on your loan conditions will suit your circumstances,
lender) reverting to a principal and interest loan particularly the ability to make additional
at the end of the agreed interest only term. repayments and pay out the term of the loan
However a further interest only loan can be without a penalty.
negotiated at this time. The interest on your
investment loan is tax deductible, making these
types of loans attractive to investors.

10
 GETTING STARTED

Standard variable rate loans Professional loan packages

The standard variable rate loan, like a basic These loans are offered to provide an all-in-
or “no frills” loan, offers more flexibility than a one loan package. They offer interest rate
fixed rate loan. A standard variable rate loan and fee savings on your loan, credit card and
will often have more features than the basic transaction accounts and some lenders also
variable option so the rate may be slightly waive the annual fees for your credit cards.
higher. The extra options (for example a An annual fee ranging from $120 to $395 is
redraw facility, the option to split between fixed usually applicable on these loans.
and variable, extra repayments and portability)
should be taken into account when choosing These packages can also offer amazing
your type of variable loan. Repayments will flexibility, with some banks willing to waive
vary as interest rates fluctuate. product switching fees when changing from a
variable to a fixed rate or converting a principal
and interest loan to an interest only loan.
Line of credit loans
We will provide you with a comparison of
Sometimes known as equity loans, these loans various loan options from our panel of lenders
are a great way to access the equity in your to assist you with choosing the right loan for
home to use for property investment, home your circumstances.
renovations or other personal purchases.
Repayments on a line of credit loan are
determined by the interest rate applicable at that
time. If you have sufficient equity in your home,
you will need to make a separate application
for a line of credit loan if you don’t already have
one in place. With this type of loan you have
the added advantage of being able to make
unlimited deposits as your repayments are not
set. Always check the conditions of these loans
as they are sometimes more expensive than
standard products.

11
 BORROWING ESSENTIALS This is where we can help you to work out
how much you can borrow and what type of
Credit reference loan will suit your budget and lifestyle.

Your lender is going to do a credit check on What deposit will I need?

you. They’ll be looking at any credit applications
made by you and will be checking if you’ve Most lenders require a minimum 10% deposit,
defaulted on payments or have an infringement however if you are borrowing 80% or more
referenced either in your name or your of the purchase price you will be required to
company’s name if you are self employed. Make pay mortgage insurance (which means an
sure that you have a ‘clean slate’ by checking additional fee). The way you structure your
your credit report. If something appears that you investment loan will depend on your personal
are unaware of, advise the agency immediately. circumstances and should be discussed with
You can order your personal credit file online. your accountant or financial advisor.
Enter your personal information, pay by credit
card and your credit file will be forwarded to you Deposit bonds
as a PDF file. Bring a print out of the credit file
to your appointment with us. Or call 1300 762 A deposit bond is a guarantee to the vendor,
207 and order your credit file over the phone. by an insurance company, that they will receive
their 10% deposit, even if the purchaser
How much can I borrow? defaults on the contract of sale. You, the
purchaser, are able to provide this guarantee
Know your limits to the vendor by paying a small premium to the
insurance company.
The amount you can borrow for your
All purchase funds are paid at settlement. In
investment property will depend on many
the ordinary course of events, settlement takes
factors: your deposit or other equity you
place, the purchase price is paid in full and the
hold, what you are buying, the expected
deposit bond simply lapses.
rental income, whether you will be negatively
or positively gearing the property, property
management costs and if you have allowed
for a period of vacancy.

12
 GETTING STARTED

Should I buy with COSTS

someone else? Stamp duty
The most common way to buy a property The amount of stamp duty payable varies from
with two or more people who aren’t a married state to state and whether you are a first home
or defacto couple is through a tenants- buyer or an investor. Your conveyancer/legal
in-common arrangement. This allows the representative will advise you of the amount
property ownership to be split any way, not payable or you can check your state’s website.
necessarily into equal shares. Three people
can buy a third each, or it can be divided in State/Territory Website
other proportions. This means your share of
the property can be left to the person of your ACT www.revenue.act.gov.au
choice when you die.
NSW www.osr.nsw.gov.au
In contrast, a property owned under a joint
tenant arrangement (usually by couples) is NT www.revenue.nt.gov.au
where the property is held in equal shares. If QLD www.osr.qld.gov.au
one owner dies, their interest passes to the
other owner. SA www.revenuesa.sa.gov.au
Shared property ownership only works if strict TAS www.treasury.tas.gov.au
ground rules and a tight contract are in place.
Everything needs to be in writing. Your legal VIC www.sro.vic.gov.au
representative should be consulted. The two WA www.dtf.wa.gov.au
most important points you need to cover are
what happens if one owner wants to sell their
share and what happens if an owner cannot
meet the repayments.
Loan application fee
There is a standard upfront loan establishment


We can determine your borrowing fee. The fee covers the preparation of loan
capacity, how much deposit you application documentation, legal fees for
may require and can also arrange standard mortgage preparation and one
the deposit bond if required. standard valuation.

13
 Legal Inspections
You will need to appoint a conveyancer/legal Building and pest inspections are a must!
representative to ensure that the contract is Your conveyancer will enlist the services of an
in your best interest and does not contain any authorised pest and building inspector. Your
unsatisfactory terms. Make sure you know your purchase contract can be subject to a satisfactory
legal representative’s qualifications and exactly inspection or your inspection can be scheduled
what service they are offering. during your cooling off period.
Their role is to: The inspector will provide a written report pointing
out any faults in the property, whether they can
• Give advice on the property contract be repaired and how much these repairs are
• Facilitate council, strata and company likely to cost.
title searches
• Order pest and building inspections Pest inspections are not usually covered in
• Arrange for the exchange of contracts a building report so will need to be arranged
• Negotiate with the vendor’s solicitor on separately. If buying at auction you will need to
your behalf ensure that all inspections are completed prior
• Arrange for the settlement process, and to the day of the auction.
• Deal with any difficulties that arise during
the settlement period. In the case of a strata title property, your
contract for sale will provide the name of the
It is a good idea to ‘shop around’ for strata manager so that you can arrange for
someone experienced, or call the office for an inspection of the books and records of the
our recommendations. owners’ corporation.
Your legal representative should also
advise you of any future developments
which could affect your home by checking
with the local council.

14
 GETTING STARTED

Insurances Landlord
Landlord insurance is a policy to cover an
Mortgage protection and investment property owner from financial
lender’s mortgage losses. Common features of a landlord
Mortgage protection and lender’s mortgage insurance policy include malicious or
insurance (LMI) are for two different situations. intentional damage to the property by the
tenant or their guests, theft by the tenant or
Mortgage protection is insurance that their guests, loss of rent if the tenant defaults
supports you in case you become on their payments, liability including a claim
involuntarily unemployed or are unable to against you by the tenant, and legal expenses
work due to illness or disability. It makes incurred in taking action against a tenant.
sense to ensure that you can continue
to meet your commitment in the case of TPD - total and permanent
unforeseen events. disability
You can choose to cover yourself for either total
However lender’s mortgage insurance is
or permanent disability or death options, providing
usually required where your deposit is less
you can no longer work or in the event that you die
than 20% of the purchase price of your
due to illness or accident. When combined with
property and protects the lender in the event
life insurance, this can provide security for you and
that you default on your repayments.
your family for the rest of your life.
Life
Building
Life insurance provides a lump sum payment to
Building insurance should provide you with
your beneficiaries in the event of your death. If
adequate cover in the event you need to repair
you are the main income earner in the family,
or replace your investment property (ie home,
this insurance will help your family manage
garage, shed).
their future (for example paying out mortgages,
schooling and other family expenses) without Income protection
your ongoing earning capacity.
Income protection insurance pays you a
predetermined percentage of your monthly
income should you be unable to work due to
illness or injury.

15
 Land tax It’s not unusual for a loan application form to
take up to 10 pages. Your lender will want
Land tax is an annual tax levied on owners to ascertain your existing assets, capacity to
of land. In general, your principal place of repay, financial risk, collateral (is the property
residence (your home) or land used for primary you are buying adequate security for the
production (a farm) is exempt from land tax. amount borrowed?). You will also be asked if
Investment property, on the other hand, may you have dependent children, how long you
be subject to land tax and the rate of tax varies have lived at your current address, what you
from state to state. We can help with the rates owe, your personal insurances and your credit
applicable in your circumstances. card details. It is advisable to have your two
most recent pay slips, group certificates for
We can provide you with information on stamp the past two years and documentation from
duty in the state of your purchase, comparisons your employer detailing income and length of
of various loan application fees and have employment.
access to insurance recommendations. We will
also quote any LMI due. Self employed applicants should provide their
past two years’ ATO assessment notices
APPLYING FOR A LOAN or their past two years’ financial statements
and accountant’s details. Some institutions
All lenders are likely to ask for the same may even ask for a profit and loss statement
information. If you’re approaching a lender certified by a registered accountant.
for the first time you’ll need to be ‘identified’. Also needed are savings details, bank
When you apply for a loan you have to show statements including transaction, saving
identification up to the value of 100 points. A or passbook accounts, investment papers
driver’s licence earns 40 points, a credit card including managed funds or term deposits,
can earn 25 points and a birth certificate 70 what you owe and own, details of personal
points. Only original documents qualify. loans, credit cards or charge cards and
tax liability if self-employed. Details of life
insurance policies and superannuation as well
as approximate value of other assets such as
furniture and jewellery should also be included.

16
 GETTING STARTED

Remember to include your expected rental

return in your loan application. This will affect
PROPERTY MANAGEMENT
your borrowing capacity and loan serviceability Professional property management frees
and may allow you to purchase a more you from dealing with tenant issues and
expensive property. Your real estate agent will gives you more time to concentrate on your
be able to provide this information. portfolio. Your property manager is also
up-to-date with changes to the Residential
LOAN APPROVAL Tenancies Act and is better suited to
negotiate with your tenant on your behalf
It is best to have your loan pre-approved should the need arise. They are also in a
before you make any offers. Knowing that position to obtain credit checks on potential
your finance is pre-approved will allow you to tenants and have access to tradespeople.
concentrate on a price range and give your If you prefer to stay one step removed and
full attention to the purchase. Remember not deal personally with your tenants, then a
that a vendor may also accept a lower than property manager is definitely recommended.
advertised price knowing that your finance
is organised. They may want a quick and
hassle free sale.
Once your loan is formally approved, we will
arrange mortgage documents to be signed. Be
sure to read the mortgage contract carefully
and understand the contents.

17
 BUYING YOUR INVESTMENT PROPERTY:
A STEP BY STEP GUIDE

STEP 1 - Have your loan Properties being auctioned may be open to

offers prior to the auction date. If you buy at
pre-approval in place auction you will usually be required to pay a
deposit of 10% on auction day. The contract
Knowing how much you have to spend gives for an auctioned property is unconditional and
you the confidence to make a calculated offer no cooling off period applies. If bidding at an
on your property of choice. auction, make sure that your conveyancer/
legal representative has checked the contract
STEP 2 - Choose the right and organised pest and building inspections
before you bid.
property in the right location
Research your chosen suburb by checking all STEP 4 - Conveyancer/
advertised listings in newspapers, the internet
and real estate agents. Make sure that you
legal representative
know the price of recently sold comparable The contract for sale should be given to
properties. Choose an investment property your conveyancer for advice and checking.
with your head, not with your heart. The conveyancer will advise you of your
cooling off rights (varies from state to state).
Sometimes investing in property in another
Once the contract has been signed by both
state is a better financial option. Keep informed
parties and exchanged, the contracts are
by reading reports on national property
legally binding. The contract will indicate
updates and best performing suburbs. Usually
when the deposit will have to be paid. If no
capital cities outperform regional areas,
pest and building inspections have been
however some coastal options have also seen
carried out, it is advisable that they are
very good growth.
ordered by the conveyancer.

STEP 3 - Make an offer STEP 5 - Final loan approval

For properties sold by private treaty you
We will organise loan documents for the
will need to make an offer to the listing real
balance of the purchase price to be prepared
estate agent. Obtain a copy of the contract
and signed by you.
for sale and organise for your conveyancer/
legal representative to check it.

18
 BUYING YOUR PROPERTY

STEP 6 - Insurance STEP 9 - Appoint a

Your lender will require you to organise property manager
building insurance (except in the case of strata
title properties). Most investors also invest in A good property manager will source and
landlord insurance. retain quality tenants, collect rent, conduct
inspections and organise repairs and
STEP 7 - Final inspection maintenance on your property. They will
provide you with a schedule at the end of the
Arrange for a final inspection with the real financial year showing rental income, repairs
estate agent. Check for all inclusions in the and maintenance and property management
contract for sale and that they are in working fees for taxation purposes.
order. Check light switches, power points,
air conditioners, exhaust fans, hot water, If something goes wrong
swimming pool equipment and security system
and request copies of all manuals for stove, If you have signed a contract to buy a property
dishwasher and other relevant inclusions. it may be a costly exercise to withdraw even
if you have not reached settlement. If the
If your property is interstate perhaps have a cooling off period has passed, the contract is
friend inspect it for you or jump on a cheap binding. If you wish to get out of the contract
flight and do it yourself. Costs associated may you may be liable to pay compensation to the
be claimed with your tax return. vendor. The amount will depend on the loss
suffered by the vendor and is usually based
STEP 8 - Settlement on the amount it would take to re-sell the
house including any loss on the subsequent
Your conveyancer/legal representative will sale. Read your contract carefully to be aware
attend to settlement. This is the day on of the consequences of defaulting on the
which the balance of the purchase price is contract. If you do not wish to proceed with
paid to the vendor. Stamp duty and lender’s a contract, seek independent legal advice as
mortgage insurance will also have to be paid. soon as possible.
You can collect the keys from the real estate
agent once settlement has been advised.

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 TIPS FOR PURCHASING YOUR SECOND
AND FUTURE INVESTMENT PROPERTIES

1. Use the equity in 2. Mortgage offset account

existing property A mortgage offset account can save interest
on your loan. Your mortgage is linked to an
Make your current property work for you! account into which your salary and other
There’s no need to own your home outright cash can be deposited and from which you
or sell it to access enough equity for an withdraw to pay bills and credit cards when
investment purchase. Equity is simply the these debts fall due. Use these savings for
difference between what your property is worth another deposit instead of paying off your
and what you owe. For example, if you have a current mortgage.
property valued at $600,000 with a mortgage of
$400,000, you have $200,000 worth of equity.
You may be able to borrow up to $80,000 3. Save your annual
against this equity to purchase an investment
property. Using this equity and combining it
lump sum payment
with the added rental income could mean that and windfalls
you can buy another property sooner.
Use your tax refund or a windfall such as an
inheritance or work bonus to help purchase
an investment property.

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 TIPS

4. Save a little extra 6. Stay informed

every month Once you have a mortgage, aside from making
the payments, it’s easy to forget about it
$150 per week can usually support an altogether. Staying informed about interest
additional property providing you have rate movements and new products could save
the deposit. Set up a separate savings you money. Over the lifetime of your loan we
account and set a target for a deposit. advocate exploring other products and facilities
This history of savings will help you to that may better suit your changing needs.
finance another property.
We recommend that you review your
5. If interest rates drop mortgage requirements and equity with us
on a regular basis.
If you have a variable rate loan and the interest
rate drops, save the difference for a deposit
towards another property rather than paying
off the investment loan.

Staying up to date on
interest rates and new
products could save
you money.

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 OUR COMMITMENT TO YOU

We understand that purchasing your first Planning your future investment property
investment property will more than likely not portfolio and other wealth strategies starts from
be your last. Once you get a taste for building your very first loan.
an investment property portfolio, it becomes
contagious. It has been reported that as few as We consider you to be a client for life when
6% of Australians actually own another property you use us for the first time - whether it
outside of their own home. We congratulate you is your first home or your fifth investment
on being one of the minority who are aiming to property. Looking after your current needs,
look after their own financial future! combined with your future needs, will ensure
our relationship is a positive one for your
We recommend that you have regular contact future. Be sure you are working with someone
with us so that we can organise finance audits with this approach as it can be a very costly
to ensure you are always best informed about exercise to start with the wrong advice,
the property market. especially when you are investing.
Also, as your properties increase in value, Good luck with your decisions. They are not to
so does your equity. Using this equity wisely be taken lightly. We look forward to helping you
for investment purposes and future planning on your property investment journey.
can ensure your peace of mind for future
financial security.

Disclaimer: The advice contained in this document has been prepared without consideration of your objectives, financial situation,
personal circumstances or individual needs. Whilst care has been taken to ensure the accuracy of the information contained in this
booklet, it neither represents nor is intended to be legal or taxation advice. Please consider the appropriateness of this information
before acting on any advice from this booklet. x aims to understand your circumstances and requirements to provide you with a
loan and other products that are best suited to your needs. This booklet is subject to copyright and must not be reproduced in any
format without the express permission of its author. © 2012.

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Your Contact
Your name
T: 00 000 000
F: 00 000 000
E: @company.com.au