About 8% of Australia’s population own second homes according to the Australian Tax Office and most of these earn a sizeable income in rental.
But while owning two properties sounds like a dream investment, think carefully about why you want to buy that second property as house prices can go down as well as up. So, when is it a good time to purchase a second house?
The experts here at Able Removals have come up with some guidance to help you decide when could be the best time to buy another house.
Chances are if you buy a second property, you’ll need a second mortgage and that is a significant financial drain. Check that you have a steady income to be able to afford a dual mortgage. Look at the size of your family and living costs and work out whether you can stretch to a second property. Sit down and look at your budget and don’t jump in without working on your figures.
You may be able to use some of the equity which you have accrued in your first property as a deposit to fund another one. If you’ve been a regular saver and command a good salary, then it should mean that if your rental income on your investment property drops below mortgage payments then you can afford the shortfall. Be mindful that if you’re renting out your investment property, there may be periods when it remains vacant.
If you are going to be relying on a mortgage, investigate the current rates. Interest rates can go up without much warning. As interest rates rise, your mortgage will too, so pick a time when they’re lower to allow for a bit of flexibility.
Consider buying a house when property prices have slumped or bottomed out. The ideal time is to secure a second property when sellers outstrip buyers so you have more scope to negotiate the price. When the housing market is in your favour, you can find yourself a bargain, there may even be more repossessed properties which are often keenly priced.
The Australian Government may want us to work longer, but we all need to plan ahead for a comfortable retirement. Many people buy a second property because they want to accrue wealth so that they can be in a secure financial position in retirement. If you buy an investment property in middle age, then you can either sell it or use the income to fund an enviable lifestyle in your twilight years.
Able Removals can help with all your requirements with a house move. We are a Perth-based, family run business and take pride in the quality of service we provide. Take a look at our excellent online reviews and speak to us today to find out how we can help you.
