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Posts Tagged ‘negative gearing’

Property Investment…New or Old?

Posted by Tamara McDowell on March 27, 2010

 

Property investment is not just about whether you decide to buy a unit or a house, you also have the option of new or old.

There are advantages for both styles of properties, and it really comes down to your short and long term objectives. Where you intend to purchase the property will also influence what type of properties are available in a particular geographic location.

Purchasing a property off-the-plan – which allows you to lock in today’s prices for a property that may be finished in a year or two in the future – can be an effective investment strategy as you will not have to make any mortgage repayments until the property is ready for habitation. The only cost will be the deposit.

The key potential pitfall with an off-the-plan purchase is that there is no guarantee that the property you buy today will have grown or even maintained its value. The downside of this is that your lender may not be willing to fund the entire purchase price, which will leave you with a shortfall.

There are also pros and cons associated with the purchase of an existing property. Read the rest of this entry »

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Negative Gearing………..

Posted by Tamara McDowell on February 27, 2010

About negative gearing

If you’ve got money to invest, an option you may consider is negative gearing.

With correct financial advice and with the selection of the right property, negative gearing can provide great tax advantages. That’s great if you’re thinking about entering the property investment market for the first time or want to increase your investment portfolio.

How do you negative gear a property?

A property is negatively geared when the costs of owning it – interest on the loan, bank charges, maintenance, repairs and capital depreciation – exceed the income it produces.

Put simply, your investment must make a loss before you can claim a tax benefit.

It works not only for property, but also shares and bonds. Read the rest of this entry »

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Property Prices over the Last Decade

Posted by Tamara McDowell on February 11, 2010

Across the capital city residential property market, the last 10 years has seen home values almost double with an annual rate of growth of 9.4%. Today the capital city median dwelling price across the country sits at $451,000 with houses recording a median of $485,000 and units at $400,000. If you bought a home 10 years ago, you were probably looking at a median price of less than $200,000 for either property type.

As the capital city market pricing graph shows, there has been distinctive periods of growth during the last decade. Between 2000 and 2003 there was a strong growth period which was following a long period of negligible value growth. Following this boom, values nationally showed little growth again until 2007.

In fact, the majority of value growth recorded between 2004 and 2007 was due to the Perth market which was undergoing a significant surge in values due to unprecedented strength in the mining and resources sector. Read the rest of this entry »

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What is LMI – Lenders Mortgage Insurance

Posted by Tamara McDowell on February 6, 2010

Lenders Mortgage Insurance (LMI) is a premium paid by you to insure your Lender against loss.

Lenders Mortgage Insurance (LMI) helps Australian homeowners enter the market earlier through allowing you to borrow a higher percentage of a property’s value.

For first home buyers, particularly those struggling to save a deposit but more than comfortable to meet their
mortgage repayments, it can be a key tool to break free of the rental trap.

Through financing a higher proportion of a property’s purchase price, lenders take on a higher level of risk should you fail to meet mortgage repayment, and the property needs to be repossessed and resold.

LMI is therefore payed by you to insure your lender against loss should this happen. It is important to be aware that
LMI only covers the lender if you default, not you.

The bigger the percentage of the property’s purchase price you have to borrow the greater the amount you’re likely to pay on insurance. So if your deposit is less than 20 per cent, and especially if you have no deposit at all, you will need to factor LMI into your home loan.

Remember that should you have the required 20 per cent deposit for a mortgage you will not need to pay LMI.
LMI is usually paid as a one-off lump sum at the time of settlement but it many cases it can also be added into the loan amount and paid off over the life of the loan – a term known as capitalising the LMI.

Speak with your broker to assess whether this option is right for you.

Posted in (LMI) Lenders Mortgage Insurance, First Home Owners, Investors, Loans | Tagged: , , , , , , , | Leave a Comment »