Whether you’re looking at the renting requirements, or the ins and outs of gearing when purchasing an investment property, here are some tips and useful answers to common questions to help you get started.
Buying an investment with borrowed money is also known as ‘gearing’. 

The rent from an investment property is used to help make repayments on your loan. Equity in your own home is often used as security, enabling the purchase of the investment property. 

For many investors, the objective is to service the loan with repayments that cover interest only. Investors hold out for an improved capital value (or capital gain) when they eventually sell. Others seek to repay the debt on the investment property to reduce the overall investment risk associated with the strategy and gain equity. 

The repayments and other expenses are generally tax deductible and have the potential to reduce the amount of income tax that you may pay. You can borrow money for investment purposes as an individual, jointly or through a trust. 

QInvest LoanFinder mortgage brokers will work with QInvest financial advisers and your tax professional to provide you with solutions on any kind of investment that uses equity in your home.

1. What fees and charges should I consider? 

Like any loan, you'll have legal fees, search costs and stamp duty. These can be included within the overall loan where your borrowing capacity is sufficient. Speak to a QInvest LoanFinder mortgage broker for more information.

2. Where do I get advice before I invest? 

Advice is invaluable in reducing and understanding the risk of an investment strategy. During your appointment, a QInvest financial adviser can help you consider the implications of purchasing an investment property to ensure you achieve your goals. 

 3. Do I need a deposit?

If you have an existing home and have built up equity, then it's possible your equity could be used as a deposit on your investment property. If you're considering using your home equity for investment, meet with a QInvest LoanFinder mortgage broker to discuss your options.

Understand your risks 

Some of the risks when investing in property include:
  • liquidity risk – a property is a large valued investment and can't be divided into parts for sale. 
  • market risk – property markets are influenced by opinion and emotion, which affect the true value of a property. The market value can be well below the perceived value. Property values are not always the same next time you look at them. 
  • legislative risk – the tax laws are constantly under review and can change to make the outcome not as favourable as you planned. 
  • physical risk – property costs from repairs and maintenance can be much greater than expected and could eat away your profit margin.   

Don’t get emotionally attached to your investment 

As an investor, you must be prepared to buy, sell and assess your property without emotion – it's an investment designed to make money, after all. Emotions can cloud your judgement, resulting in a less than favourable financial outcome. 

Get financial advice before you buy and sell 

The taxation consequences of investment can vary significantly and will depend upon your circumstances. Understanding the financial impacts is key to making the right decision.