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Property investors re-enter the market

Monday, October 19, 2009

An online poll conducted by the Loan Market Group in July this year found 82% of respondents were looking to invest in property over the next 12 months. With the First Home Owner Boost coming to a close at the end of the year, now is the time for both new and existing investors to step in and take advantage of historically low interest rates to start or expand their property portfolio. From an investment finance viewpoint, there are a number of ways you can go about financing the purchase of investment property.

Using your equity
First-time investors often use the equity in an existing property as additional security for their investment purchase. This decreases the size of the deposit you require to secure your purchase. Using existing equity can also assist you to expand your property portfolio faster.

When using any existing equity, you can choose to use just one loan to cover all of your purchases or a separate loan for each purchase. Both methods have their pros and cons, so which one you choose will depend on your situation and overall investment goals.

Line of credit home loans
Line of credit home loans are often used by investors to securely purchase multiple properties. A line of credit is like having a very large secured credit card. You generally only pay interest on the portion of the loan that is drawn down, which you do whenever you wish to purchase a new property.

You may be required to make repayments on the principal after a set period but these types of loans do differ from lender to lender so you will need to check carefully what you are being offered.

Getting started
Obtaining the right information is the most important thing you can do. It is also important to gain loan pre-approval before finding your desired property.

For further information contact:
Peter Sullivan, Loan Market Mortgage Broker
M: 0412 274 737
E: peter.sullivan@loanmarket.com.au

- Peter Sullivan