Buying your first investment property

Common Questions About Buying Your First Investment Property

What deposit do I need for buying my first investment property?

The deposit required for buying your first investment property typically ranges from 10% to 20% of the property's purchase price, though this varies depending on the lender and your financial circumstances. Many lenders require a minimum 20% deposit to avoid lenders mortgage insurance (LMI), which can significantly impact your loan amount and overall borrowing costs. AXTON Finance works with clients to explore various deposit options and can access investment loan options from banks and lenders across Australia that may offer more flexible deposit requirements. Our Finance & Mortgage Brokers assess your individual situation to determine the most suitable approach for your first investment property purchase, considering factors like your borrowing capacity and long-term investment goals.

How do interest rates differ for investment property loans?

Investment property loans typically carry higher interest rates compared to owner-occupier home loans, as lenders consider them higher risk investments. However, experienced Finance & Mortgage Brokers like those at AXTON Finance can help you access some of the best interest rates available in the market through their extensive lender relationships. Variable interest rate options and fixed rate alternatives each offer different benefits depending on your investment strategy and risk tolerance. The specific interest rate you receive depends on various factors including your loan to value ratio (LVR), credit history, and overall financial position. AXTON Finance compares investment loan options across multiple lenders to secure competitive rates and potential interest rate discounts for qualified borrowers.

What ongoing costs should I consider when buying a rental property?

Buying a rental property involves numerous ongoing costs beyond the initial purchase price and loan repayments that impact your investment returns. These typically include property management fees, council rates, insurance, maintenance and repairs, and potential vacancy periods between tenants. Stamp duty represents a significant upfront cost that varies by state, whilst ongoing expenses like property management can range from 5% to 10% of rental income. AXTON Finance helps clients understand these cost implications during the planning phase, ensuring your borrowing capacity accounts for all associated expenses. Our Finance & Mortgage Brokers provide comprehensive guidance on budgeting for investment property ownership, helping you make informed decisions about your first investment property purchase.

Can I use equity from my home to buy an investment property?

Using equity from your existing home to fund your first investment property purchase is a common and effective strategy that many investors employ. This approach can potentially eliminate the need for a cash deposit, though it does increase your overall borrowing and affects your loan to value ratio (LVR) across both properties. AXTON Finance specialises in structuring these complex financing arrangements, ensuring clients understand the implications and benefits of equity-based investment strategies. Our experienced Finance & Mortgage Brokers assess your current property's value and existing loan balance to determine available equity and optimal loan structures. The application process for equity-based investment loans requires careful documentation and planning, which our team manages through our streamlined application process.

Should I choose an apartment, townhouse, or standalone dwelling for my first investment property?

The choice between an apartment, town house, or stand alone dwelling for your first investment property depends on various factors including your budget, target rental market, and long-term investment strategy. Each property type offers different advantages in terms of purchase price, rental yields, maintenance requirements, and capital growth potential within the current property market. Apartments often require lower initial investment but may have higher body corporate fees, whilst standalone dwellings typically offer stronger capital growth but require higher deposits. AXTON Finance doesn't provide property investment advice but works closely with clients to ensure their chosen property type aligns with appropriate financing structures. Our Finance & Mortgage Brokers can connect you with qualified property investment advisers whilst focusing on securing optimal loan terms for your preferred investment approach, helping establish a strong foundation for your investment property portfolio.