September 24, 2010
With rental prices on the rise it is a good time for investors to take advantage of the current market conditions. According to a Rent and Sales Report by Housing NSW, the median rent increased by 6.1 percent to $350 per week for the June quarter compared to the same period last year.
That’s not a bad return on the average mortgage size for NSW according to the Australian Bureau of Statistics (ABS), which is about $313,000. That means repayments for an average standard variable rate of 7.05 percent would be $2222 per month. After rental income of $1400 a month, you would essentially be paying only $822 per month or $205.50 per week on your repayments (not including landlord fees and other associated costs).
Investors should be aware that with a higher demand for properties in spring, there is sure to be an increase in competition, which could have an impact on prices. As more buyers enter the market this mortgage season and as rental rates are on the rise, it could be a case of first in best dressed.
It could also take longer for loan applications to be processed as the number of borrowers will increase, so make sure that you take this into consideration when applying and be prepared.
Get the most out of now
If you are considering entering the investment market this mortgage season, here are some tips on how to get the most out of applying for an investment loan during this time of the year.
- Do your homework. Research the prices of property in the areas you are interested in, as well as the going rental rates. That way you can see if you will get a good return on your investment and whether it is a good time for you to enter the investment market.
- Shop around for investment loans by comparing home loans online. Look for ones offering a lower interest rate and lower fees to get more out of your investment.
- Get organised. Make sure you have all your paper work and documentation ready to get your investment loan application moving. Because this is a busy time of the year, you don’t want to delay the process any longer than necessary for your loan to be approved.
- Always read the product disclosure statement (PDS) before signing and make sure that you are aware of all the fees and charges attached to the loan.