I want to buy a second property: What are my finance options?

So, you want to buy a second property: excellent decision. Purchasing additional properties has obvious benefits to your income from rent and capital gains, but did you know it’s also one of the primary indicators of high financial comfort, according to Members Equity Bank? Its researchers found that household investments and property ownership were a “key factor” in increasing financial security.

Obviously, there are plenty of reasons for buying more assets – but how do you get there? Whether it’s an upgrade or an investment property, how are you going to finance your new purchase?

Unlocking your equity is integral to moving on in your property journey.Unlocking your equity is integral to moving on in your property journey.

 

Option 1: A second home loan

If you find yourself being more than capable of paying off your current mortgage, but don’t have quite enough liquid capital to make a purchase without a loan, the simplest option is just a new mortgage! It’s very much a similar process as your first one, though there may be a few differences.

You might have used one of the First Home Owner Grant offered by some state governments – you obviously won’t be able to use this boost again. This can make it a little bit more difficult, but certainly not impossible. Refinancing your current home loan is also a possibility, so you can access some equity directly – paying off your old loan with a new one and receiving a cash lump sum in the form of the equity on your home.

The key is to find the right loan that fits your needs – repayments, interest rate, additional features such as lump sum payments. It’s all integral to get the right advice about a range of choices.

Option 2: Moving home loans

The key is to find the right loan that fits your needs.

This is for those people who have enough equity in their current property or have enough liquid capital to buy without a traditional home loan. However, you may still find yourself just on the cusp of not being able to afford the gap between selling your current home and buying the new one.

It’s a frustrating scenario, but solvable with what is known as a bridging loan. It’s a short-term option, and each lender offers different features, so be sure to speak to a mortgage broker on your range of choices.

This is hardly an exhaustive list – there are plenty of other ways of expanding your current property portfolio. You just need the right advice from an expert mortgage broker.

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