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  • Getting on the property ladder with an investment home loan

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    It is no surprise that millennials are putting off buying their first property. They are not able to capitalise on the financial benefits of home ownership, which makes it harder for them to save up for the initial investment required to get out of the renting cycle and into their own property. Rather than buying your first home, young prospective homeowners can instead look to investment home loans as a way to enter the housing market.

    Rent, buy or both?

    With an investment property, young Australians can start on the path towards residential home ownership.

    Younger generations are already disadvantaged going into the property market as they experience some of the lowest levels of financial comfort; Members Equity Bank's Household Financial Comfort Report, released in February 2016, found that those aged 18 to 49 had significantly lower levels of financial security than those over 50.

    Rather than waiting on saving up for a first home as a residential property, millennials should look into whether buying a home as an investment is right for them. With an investment property, young Australians can start on the path towards residential home ownership.

    One of the big obstacles for millennial home ownership is a lack of affordable housing in desirable areas. With an investment property, it is possible to own and let a home in a more remote location while living in rental property in a more expensive neighbourhood. Changes in value could turn rental payments from the investment property into a source of income – which can help build up savings for a home deposit down the line.

    The risks and rewards of property investment

    While there are risks in investment property, it can be a large benefit for millennials seeking to buy their top-choice first home. With the security it provides behind them, young home buyers have more leverage they can bring to bear when buying their first home. The financial stability can enable them to be more competitive against other potential buyers.

    An investment home loan can give young buyers leverage for buying their first house.An investment home loan can give young buyers leverage for buying their first house.

    Of course, potential investors need to do their research and, ideally, consult with a mortgage manager on their investment plans. With all the complexities involved, it is easy to fall into a number of snags that may hinder home ownership down the line.

    Many states, for example, offer grants and stamp duty exemptions for first-time home buyers. Having already purchased an investment property could disqualify them from these grants when they want to move up to a residential home. Expert advice will help them get the most out of their investment.

    If you want to get your foot on the property ladder through an investment home loan, contact a mortgage manager at Mortgageport today.

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