Blog Article

Given recent announcements around changes in legislation and tax this year we thought it timely to write around some things to consider when stepping into this domain given the idea of making such a purchase may now become more of a goal for people to move towards in future.

As mortgage advisers at the Mortgage Advice Company, we form a big part of your team in securing this dream of obtaining finance but also in how you may be able to structure what you borrow to your benefit.

Why purchase an investment property?

There are many reasons as to why with the most common being the returns from rent, long term appreciation of the property and diversification of an investment portfolio.

Many New Zealanders have had positive experiences in growth of their wealth by using surplus ‘equity’ or funds they have on hand which makes it a popular option to take.

Recently the Government has announced changes in tax policy in deductibility being reintroduced and brightline timelines to make this more attractive for those to invest in property.

Investment Property Loans

In securing finance for an investment property it’s important to be aware of your current equity position to understand what you can borrow from the property you own and what you can borrow against the property you purchase. The Loan-to-Value-Ratio’s (LVR’s) lenders use are also likely to change this year with new Debt-to-Income Rules coming into place and so seeking professional advice on this is a necessity to ensure you get this correct.

Our Mortgage Advisers can provide options on what a preferred structure could look like with options such as interest-only loans that enable better cashflow or if purchased under a company structure how this might be best set up in conjunction with an accountant.

Get Prepared

Getting pre-approved is always a positive step forward in understanding what your purchasing power looks like. Through the application process information is collected around your current financial position where we can determine what’s affordable and also put you in a position to move quickly in the situation where you want to move in the market.

Once you have certainty on what you can borrow it makes the process of purchasing easier with your Mortgage Adviser working with you to ensure you are able to make a competitive offer.

How we Help you

Our Mortgage Advisers at the Mortgage Advice Company have access to a wide range of lenders that can cater for a number of different scenarios depending on your situation and work with other professionals you use in how best to structure what you borrow and tailored loan solutions.

Once you have secured approval and found a property to purchase we can work with you in ensuring the lender is satisfied with the property you purchase and support you through stages of diligence on what you intend to buy to ensure you are able to make informed decisions on what you enter into.

With added policies like the introduction of debt-to-income ratios coming into effect, this means seeking advice from professionals who have a strong understanding of this becomes invaluable.

We also work with the lender to deliver the most competitive pricing and terms for what you borrow saving you in cost.

Conclusion

Purchasing an investment property has always been a goal for many New Zealanders once they have secured their first home or paid down their current home lending.

In an environment where there is constant change, it’s invaluable to seek the advice of those that have experience and knowledge around best practices in making this step.

Having a trusted Mortgage Adviser on your side like we have at the Mortgage Advice Company provides a range of options and solutions that can help in you securing this dream.