Benefits.

  • A bricks and mortar investment with rental income.
  • Leave a nest egg for your family.
  • Provide a cashflow to help fund part of your retirement.
  • Use the equity in your current property to help you get your next one.

Things to consider.

Pros and cons

Circumstances differ for everyone but here are some of the key advantages and risks of investing in residential property.

Advantages Risks
You could get rental income which could cover your mortgage repayments or a large part of them. Unexpected expenses such as maintenance/wear and tear, an untenanted property or an increase in insurance premiums or rates.
Some expenses may be deductible against your taxable rental income, including interest paid on your loan. Interest rates could rise, increasing your costs and reducing the money you're making from the property.
You could make capital gains as the value of the property increases. Initially, there may be little or no profit from rent after expenses. Property investment is often about long-term profit.
You could use equity in your existing property to purchase your investment property. The value of your property may not increase, depending on the market.
It's a 'bricks and mortar' investment so you have something tangible to show for your money. If you need to sell, it may take some time, plus you could make a loss on the sale. If you are unsure of the tax treatment of investing in residential property, you should seek advice from a tax professional.
  With increased debt held against your home, a change in circumstances may make it more difficult to repay your loans.

There will also be tax implications from investing in residential property. We strongly advise that you always speak with an independent tax adviser before you invest in residential property.

 

Can I afford it?

Property investment could cost less than you think. Crunching the numbers is a huge part of the process and making the investment a success. Calculate your budget by working out:

1. How much equity you have in your existing home.

2. How much money you have saved.

3. The costs involved.

4. How much you need to borrow.

5. What rental income you would be able to receive for a property within your price range to cover your expenses.

Get help with this process by talking to one of our Mobile Mortgage Managers.

Ongoing costs

When working out if you can afford to buy an investment property, consider the ongoing costs - such as loan interest (including any applicable low equity margins), property management fees (if you don't manage the property yourself), property insurance, insurance for yourself, repairs and maintenance, and council rates. Take a look at the potential costs on the 'Do the maths' page.

Achieving your goal

Before investing in property, consider the goal you want to achieve. It could be:

  • To set yourself up for a longer term goal or retirement
  • To pass a property down to your kids while making money in the meantime
  • To generate an income from the property today or in the future
  • To make gains in the short term or long term.

Once you've done your initial research and have a goal in mind, talk to a range of experts you trust about the best way to achieve it. This could be a Mobile Mortgage Manager, your lawyer, your accountant, a financial adviser and a trusted real estate agent.

Calculators.

Find the best option for you with our home loan calculators.

Get in touch.

Meet with an expert

Our Mobile Mortgage Managers can come to you, when it suits you best.

Find a Mobile Mortgage Manager

Talk to us

Call us any time from 8am - 6pm weekdays, 9am - 3pm Saturday.

Call 0800 177 277

Visit us

Make an appointment to talk to a home loan expert in branch.

Find your nearest branch

Things you should know.

1 Conditional approval requires a credit check and confirmation of the details provided in your application. Other conditions may also apply depending on the nature of your application.

The material on this webpage is provided for information purposes only and is not a recommendation or opinion in relation to property investments or home loans. The information on this webpage does not take your particular financial situation or goals into account.

Interest rates are subject to change. Westpac's home loan lending criteria and terms and conditions apply. An establishment charge may apply. A low equity margin may apply. An additional fee or higher interest rate may apply to home loans if the application is accepted but does not meet the standard lending criteria.