Property Investor FAQs

Investment properties have many benefits when building long-term wealth. If you take the time and select your investment properties well, it can deliver good returns for long-term investors.

Will an investment loan be any different from my existing loan?

There are a few differences between what you need to do to borrow for a property you will live in and for one rent out. Some lenders charge a higher interest rate for investment properties because their risk may be higher. But this is not always the case.

Can I use the equity in my home as a deposit?

If you have owned your own home for a few years, you could have built up quite a bit of equity in your property. Equity is the value of an asset not subject to any lender’s interest. E.g., a property worth $500,000 with a mortgage loan of $150,000 has equity of $350,000. Instead of finding a cash deposit to buy an investment property, you can use this equity as the deposit.

What fees and charges should I consider?

When you buy a property, there will be costs such as establishment fees, solicitor fees, and stamp duty. Instead of trying to find the cash to pay these fees, take them into account in your borrowings. That means you don’t need thousands upon thousands of dollars in savings to get started.

What’s negative gearing?

A property is negatively geared when the costs of owning it (i.e., interest on the loan, bank charges, maintenance, repairs, and capital depreciation) exceed the income it produces. Simply put, your investment must make a loss before you can claim a tax benefit.

What’s positive gearing?

You can also positively gear a property. This occurs when the investment income exceeds your interest expense (and other possible deductions). Note that you may be subject to additional tax on any income derived from a positively geared investment.