So you think its time for buying investment property?

Source: Lisa Montgomery, Head of Consumer Advocacy

June 29th is fast approaching and tax payers are rushing around trying to sort out the receipts from the old shopping lists.  If you are ready to buy investment property, now is a better time than ever to review your financial position.  Here are some factors that budding investors should be considering before you start the search for the right investment:

Credit card clean up and reducing balance limits
With the new financial year around the corner, now is the time to buckle down and start whittling that credit card balance back down.  Playing unnecessary interest of around twenty percent is money lost that could contribute to an investment property.  So give yourself a fresh start and start the financial New Year credit card debt free!

Also, your balance limit on your credit card can affect your borrowing power.  The larger your credit card limit, the higher a liability you become since you’ll potentially have less of your income to contribute to mortgage repayments.  Therefore by reducing the limit on your credit card balance, you are able to afford to borrow more.   

Mortgage makeover
Look at your current mortgage and see if you can work with its existing structure to make further inroads into your payments.  Paying more off each month, changing to fortnightly payments instead of monthly and re-assessing the loan features can save you significantly over the long term.

Trim the spending
Keep a log of what you spend day to day - until you write down your spending habits, you can’t determine where you can trim the fat. Building a budget is a great way to get unruly spending habits under control.  Remember that budgeting allows money to work for you so take advantage of the pros to planning your finances.

Plan ahead for expensive annual events
By regularly putting a small amount of money aside for longer term or annual events such as holidays and Christmas, you can avoid the hangover effect one event can have on your finances for the rest of the year.

Shop around for better insurance premiums
Once you combine the costs of private medical insurances, car insurance, home and contents insurance over a year, it all adds up.  But by shopping around insurance providers to see if you can get a better deal, even a ten saving can free up hundreds of dollars over a 12 month period

Do you have a favourable balance of enough equity and a good cash flow?
You might be surprised to find that in the process of paying off your loan, you have in turn built up a substantial equity nest. If this is the case and you are comfortable with your current repayments, you could in fact be in a position to purchase another property.

Think about a mortgage protection plan
You protect your physical health through medical cover, so shouldn’t you be protecting your mortgage too? Especially since we are in the midst of a rising interest rate environment.  If you intend on investing, meeting two loan repayments can be cumbersome at times 

Don’t rush into any decision  
Make sure you do your research.  There are lots of potential investment options available and the internet is a great resource in providing up to date information from a network of independent sources.  Don’t just take the word of a well trained sales person as gospel. Investing is a long term decision so it’s important to not be pressured into making a choice.

Resi Home Loans offers an ideal range of home loan and home mortgage products to suit your every need. To find the best home loans for you, check out our mortgage calculators and our current home loan rates today.