Have you set a budget within your means?
You may be looking at an investment loan term of 25 or 30 years, depending on the size of the deposit you’ve saved. And, as this may be one of the biggest debts you’ll ever take on, it’s important to prioritise any other financial goals you might have before jumping into anything.
If you already own a property, it may also be possible to access the equity you have in it to secure additional finance from your lender. Check out some of the pros and cons in our article - How to build equity in your home and use it to invest. Meanwhile, here’s a snapshot of some of the upfront and ongoing costs you may come across.
Upfront costs:
- Deposit (generally around 10% to 20% of the purchase price) unless you’re paying outright
- Loan application fee (a one-off payment to your lender covering basic admin)
- Lender’s mortgage insurance (which you may need if your deposit is less than 20%)
- Government charges (stamp duty, mortgage registration and transfer fees)
- Legal and conveyancing costs (which will vary depending on the solicitor or conveyancer)
- Building, pest and strata inspection fees
Ongoing costs:
- Loan repayments and interest charges
- Strata fees (for communal properties)
- Council rates/water rates/Insurance (for the building, contents and you as a landlord)
- Repairs and maintenance costs
- Property management fees
- Vacancy costs if you don’t have tenants for a period of time
- Other charges, such as land tax
Have you looked at your credit report lately?
If you’ve got a credit card, mobile phone plan or utility account, there’s probably a credit reporting agency out there that has a file with your name on it.
Credit providers give information about you to credit reporting agencies and they also access this information to determine whether they want to lend to you.