Skilled Conveyancing Services P/L

Why Invest?

We are constantly bombarded in the media about investing for the future and whether funds from superannuation are going to be sufficient to keep us living the lifestyle we are accustomed to during our working careers. With the various investment vehicles available to us including shares, property, and bonds, it can be a confusing task deciphering the scope of financial products such as investment loans that are available to suit our investment needs.

Do you have equity in your home?

In some instances you don't even need a cash deposit to secure an investment property. Utilising any accumulated equity in your family home as security provides the "deposit" for your investment property. This means you may not need to put in a cash deposit of your own. The amount of equity you have in your home is determined by the difference between the market value of the property and what you owe the lender. If the amount of equity is sufficient you may have the deposit you need to purchase an investment property or to use the funds available to invest into the share market. How much equity do I need to have in my own home before I can start borrowing to buy an investment property? Unfortunately there is no fixed amount but it helps to understand what LVR is and how it used to calculate what lenders will let you borrow. LVR or "Loan to Value Ratio" is the percentage of the loan amount being borrowed compared to the market value of the property. The policy of lenders dictates that a particular LVR is required to attain approval for loans. The LVR will vary from lender to lender but for investors an LVR of 90% and for owner occupiers, an LVR of 95% is commonplace. A few lenders will also lend the full 100% of purchase price (terms and conditions are applicable). The LVR will also determine whether Lenders Mortgage Insurance will be necessary. In a majority of cases, loans with a LVR greater than 80% will attract mortgage insurance.

What investment loan features suit my investment goals?

If you would like to pay off your home loan quicker or would like to access equity for future investment purposes we offer financial solutions to enable you to do so. Line of Credit or Offset accounts use your day-to-day savings to reduce the interest payable on your home loan. Your money is then working for you 24 hours a day rather than working for the bank. The banks calculate the amount of interest you owe based on the daily balance of your account, and then charge this monthly. The benefits of this structure mean that funds deposited into your equity account, e.g. wages, income, and rent, will help offset the interest payment of your loan. This system can also be established with a credit card facility. This enables you to put all your every day purchases on your credit card. By utilising a credit card with up to 55 interest free days, your funds will be sitting in the equity account offsetting interest payments for as long as possible. At the end of the month the credit card balance is paid off in full thus incurring no interest charges on the credit card.

We invite you to sit down with one of our experienced Lending Managers and discuss your proposal and options in the comfort of your own home, office or here at Skilled Conveyancing Services P/L.