Is There a Good Time to Buy a Second Property?
When should you think about purchasing a second property? Read more from Funding Options Managing Director Dom Cassisi.Just because your first property purchase was successful doesn’t necessarily guarantee that your next one will be, as well.
What you can expect is that the right time to purchase a second property will depend on a few factors:
– Your position as an investor
– Current interest rates
– Loan structure you’re considering
– Suitability of your prospective property
Let’s take these categories one-by-one to see how you measure up.
Where Are You At Financially?
The right time for one investor to purchase doesn’t make it the right time for everyone. Just because your friends and neighbors are swooping in on secondary properties isn’t your sign to dive right in.
Take an honestly look at where you are at.
If you are financially secure and your ideal property is now available, then now is the perfect time for you to buy.
Just like when you purchased your first property, you need to make sure that you have the means to secure the debt against your property.
Do you have enough equity on your current home to make this happen? Have you got plenty in savings? Are you prepared to make all the needed updates and outfittings to the new property?
Think about how easy it will be for you to make the monthly repayments on a second property.
Keep An Eye On Interest Rates
As we write this, fixed interest rates are at record lows.
What this means for you is that borrowing is now more affordable than ever. So now is definitely a good time to considering taking out a loan for a second property.
But as you’re well aware, these rates can change quickly. Make you consult with a mortgage broker to get the best possible deal.
Which Loan Structure Is Right For Your Second Property?
Fixed or variable?
Will you tap into your current home equity?
How quickly do you want to pay off your loan?
Can you use your redraw account?
How will you afford the deposit?
Here too, you’d do well to seek advice before attempting to secure a loan. An expert like those here at Funding Options will help you identify the best loan structure for a second property.
Selecting The Right Second Property
Particularly if you have plans to rent your property, you’ll need to consider a whole host of factors such as:
– Property size
– Condition of the property
– Potential improvements that can be made to the property and area
– Finding suitable tenants
One of the decisions you’ll be facing is whether to sell your first property before or after you buy the second one. If you sell it at all, that is. Waiting to sell usually gives you more access to resources such as equity and moving your mortgage.
For more tips on purchasing a second property or advice about your loan deal, contact our team here at Funding Options.
– Dom Cassisi, Managing Director