Perth Experts on Investment Property Deposit Amounts
If you’re looking at buying an investment property, securing financing is a key step. Part of this involves assessing the deposit that you’ll require. In this handy guide from Motivate Property Group in Perth, we’ll go over deposit requirements, factors that influence it, saving strategies and options for securing financing.
Understanding Deposit Requirements
Generally speaking, a 20% deposit is recommended to avoid Lenders Mortgage Insurance (LMI). A larger deposit is also handy because it means you have a smaller loan overall and won’t have to pay as much interest over the life of the loan. When it comes to LMI and deposit requirements, keep in mind that different lenders have different lending criteria. They’ll also take into account your circumstances and any other relevant factors such as the type of property you’re purchasing.
Commercial properties, for example, typically require a higher deposit than residential properties, reflecting the additional risk for lenders. The Loan-to-Value Ratio (LVR) measures how much you borrow as a percentage of the property’s value. For example, if you're buying a house for $100,000 and borrow $60,000, your LVR is 60%. The lower the LVR, the less risky it is for the lender. A larger deposit lowers the LVR.
Other Factors That Impact Deposit Requirements
Depending on the lender, they may look at a variety of other factors when determining minimum deposit requirements, such as:
● Your personal financial situation and credit history.
● Current market conditions and expectations will impact the required size, terms and timings of your deposit.
● The characteristics of the property, including the location, size, features, condition and access to amenities.
Saving Strategies
There are several strategies you can use to save for a deposit for an investment property. Start by setting a realistic budget and do your research to find the right mortgage product for your circumstances. Consider long-term financial planning and strategy. This includes future-proofing your budget to prepare for potential interest rate changes over time as well as other changing
Financing Options
There are several strategies you can use to save for a deposit for an investment property. Start by setting a realistic budget and do your research to find the right mortgage product for your circumstances. Consider long-term financial planning and strategy. This includes future-proofing your budget to prepare for potential interest rate changes over time as well as other changing
When looking at the deposit required for an investment property, there are many financing options and considerations you should take into account.
● You could move forward with a guarantor loan, where a family member with a good credit rating acts as a guarantor for the deposit.
● You could also utilise equity from a property you already own. Equity refers to the value of your home, minus what you’ve paid in mortgage.
For example, if your house is worth $300,000 and you owe $150,000, your equity is $150,000. You can use equity as the basis for a deposit.
The experienced property investment team at Motivate Property Group can provide you with specific advice about what kind of deposit you need depending on your property goals. We can also connect you to the right lender and help you secure financing that suits your circumstances.
Get in touch with the experts at Motivate Property Group today for tailored property investment advice. Feel free to contact us online.