Property investors have the advantage over share-market investors because they can use leverage to build capital growth. Leverage is the term used to describe the way investors use borrowed money to buy property or shares.
Property and shares both return between seven and 15 percent a year. Most financiers will limit loans on share-based security to 60 percent of the value. Property financiers will lend 90 percent of the value of the property on mortgage. This gives the property investor with a small amount of capital control of an asset worth almost three times the equivalent value in shares.
To use leverage to advantage find a loan provider who will:
• Lend 90 percent of the property value
• Disclose the security value of the property prior to purchase
• Allow 80 percent of the projected rental income in assessing the investor's ability to repay the loan.
These requirements may disqualify the big four banks but the finance market is very competitive. Shop around to find a mortgage provider, like investloan.com.au, who will support an investor with limited capital. Investors can rely on property to increase in value. When the value of one property has increased by between 10 and 15 percent the equity can be used to buy another property. This exercise is repeated to build wealth. Investors have the advantage because the property is being paid for by the rental income and tax benefits are maximised.
To find out more, or to book to attend one of our property investment seminars Click here or visit www.propertyinvestmentseminars.com.au
The above information is supplied by JLF.
Disclaimer: while due care is taken, the viewpoints expressed by sponsors do not necessarily reflect the opinions of Your Investment Property.
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