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If you are financially secure, the returns on an investment property during current times of uncertainty could be significantly higher. Here’s a quick peek into the factors that could make purchasing an investment property through mortgage worthwhile.
Rock bottom rates
With two successive rate cuts, experts opine that the RBA is unlikely to slash them any further on account of the punitive action it may have on savers. Rates in all probability will stay at their current levels till the economy begins to recover- which as per the RBA’s recent outlook announcement is likely to take two years. Current rates are the lowest in Australian history and this two-year window, therefore, provides a fantastic opportunity to maximise returns on investments procured through a mortgage.
Risk averseness of the mortgage industry
With lenders getting more cautious and conservative with dispensing loans, if you are in a financially secure position, securing the right mortgage offering may become relatively straight-forward. You are likely to see lesser competition from other buyers who are in high risk industries like hospitality, tourism and retail.
As per a CoreLogic March 27, 2020 report, the market size has already shrunk with a 20% dip in listings. Existing property listings may, therefore, be from motivated sellers. You may be in a significantly better-negotiating position with a lot of sellers seeking immediate financial respite through a property sale.
- Do not get blindsided by the low property rates. Research well on anticipated returns as per area, infrastructure and other significant property rate affecting criteria.
- Do not get pressured into making an offer that you are not comfortable with. Remember that this currently is a buyer’s property market.
- Make sure your mortgage rate is most competitive.
- Go for a mortgage solution that has features to match your specific circumstances. For instance, would you need a mortgage with an offset account? Should you fix a part of your loan and leave the balance on a variable rate?