Yellow Brick Road: Home
YBR

Boost Mortgage Investment Property Returns in COVID

In this article:

Here’s why purchasing an investment property through mortgage during COVID could be worthwhile.
 

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.
 

Seller motivation

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.

 

Take the first step

Buyer Competition

The wide-spread impact of COVID caused hardship has led to several buyers postponing or cancelling property purchase decision. This could result in a significant decline in competition from other buyers you would face under normal circumstances.
 
Tenant prospects 
 
The entire search to purchase process can take anywhere between two to three months. By this time, much of the economic fallout from COVID-19 is likely to be in full play, giving you better clarity. Post-purchase, finding a tenant will take another 2 – 3 months, by then there would be a meagre chance of the pandemic adversely affecting the financial prospects of your tenants. 
 
Inspection
 
If the thought of physically inspecting properties and the risk of virus exposure is worrying you, opt for virtual inspections. In the wake of the prime minister’s recent auction ban, most real estate companies have been providing prospective buyers with digital inspection facilities. Inspect properties online and book a private one-on-one appointment for short-listed options only.
 
While current circumstances undisputedly provide an excellent opportunity to benefit from an investment property mortgage, there are a few things you should keep in mind.
  • 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?
It’s best to seek professional expertise to understand your financial goals and navigate the complexities of the mortgage market to zero in on the right option for you.
 

Feature Articles

A Guide to Mortgage Pre-approval In addition to providing a clear idea of your borrowing capacity, a mortgage pre-approval can also expedite property purchase. Here a few things you need to consider before applying for one.

What to consider while switching to a lower fixed rate If you're considering switching from a variable rate to a fixed rate loan in the wake of the recently announced RBA rate cut, be sure to weigh the saving benefits against possible trade-offs like no offset account and redraw facility.

What the November RBA rate cut means for borrowers Here's a quick guide on how to benefit from the recent RBA rate cut on 3rd Nov 2020

Decoding property price rise & the latest RBA rate cut Here's why gradually rising property prices and all time low interest rates make it perfect time to hop on to the property ladder.

How to switch to a better home loan rate If your home loan is over two years old there's a good chance that your rate isn't competitive. Here's a quick step by step guide on switching to the best market rate.

Dos & Don’ts of applying for Govt. Property Schemes Don't let Govt. schemes & grants interfere with your search for the right property. Here's what you need to keep in mind.

View all articles



Enquire now