Considerations when buying a second property

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What to consider when buying a second property

Buying your own home remains the great Australian dream – and buying a second property may help you take your wealth further.

Whether you’re building your property investment portfolio, buying a holiday house or supporting a family member, there are plenty of things to consider before you take that next step.

Consider your cash flow

Property tends to be a long-term investment, so do your sums to make sure you can afford the ongoing repayments on two mortgages. Also think about any major life changes on the horizon. For example, you may be planning to expand your family, or you might need to support a parent in the coming years.

Get to know the market and location

Research what’s happening in the current market and whether it’s the right time for you to buy. Get to know the area you’re considering by speaking to local residents and real estate agents. It’s also wise to look into the short and long-term planning for the area. For example, nearby construction may affect your ability to find a tenant.

Investigate before you invest

If you’re buying a property as an investment, carefully consider its location. Buying in a high-demand area is likely to see you enjoy a constant flow of income from the rent.

You’ll need to provide your lender with a rental estimate letter, which you can get from the agent managing the property.

Keep in mind that generally lenders only take 50–80% of the rental income into account when calculating whether you can afford the loan.

Choose the right mortgage

The amount you can borrow and the type of loan you choose will depend on various factors. This includes the equity in your current home, your income and expenses, and your property valuation. It helps to get quality advice on the right mortgage for you, along with other considerations such as negative gearing, and how to structure your loan to maximise tax effectiveness.

Whatever your reason for considering buying a second property, being well-informed will ensure a smoother purchasing process and a financially secure future.

If you need further support or advice, Equilibria Finance can guide you through this process. 


Anthony Landahl | Equilibria Finance

This is for general information purposes only and does not constitute advice. With all of these options there are a number of considerations outside the scope of what is covered in this article that you need to understand to ensure your personal circumstances are taken into consideration.

This is for general information purposes only and does not constitute advice. With all of these options there are a number of considerations outside the scope of what is covered in this article that you need to understand to ensure your personal circumstances are taken into consideration.

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