Property Investment – It’s not all about location, location, location….
You must consider Loan Structure, Structure, Structure….
The decision to purchase your first investment property is a significant one, but one that all too many rush into without taking into consideration one of the most important factors –
The appropriate loan structure to finance your purchase.
Interest only repayments as opposed to principle & interest repayments is a common one that the majority of us default to on our investment borrowings, but most definitely something that needs to be discussed with your accountant or tax specialist prior to committing to anything.
The other important component that is more often overlooked is the manner in which your lender takes security over your properties, especially where lenders mortgage insurance is involved.
We recently had a client approach us to arrange some finance for their second investment property. As an existing ‘big 4’ bank client, they’d been to their local branch to cost the new purchase, which was going to incur lenders mortgage insurance of approximately $17k.Some very basic restructuring of the way in which the new borrowings were sought, resulted in us being able to save that client over $6k in mortgage insurance premiums, hence keeping their interest payments down just that little bit more.
The new structure also meant that the clients’ properties are not intertwined so as to provide greater flexibility when they come to sell one of them down the track, which is perhaps just as important as the thousands of dollars we’ve already saved them!
Contact Travis at Zobel Mount Gambier or your nearest Zobel Office to get more information about the most cost effective way to structure your loans.