Finding the right home loan for your investment
What is equity?
Equity is the difference between the value of your current home and the amount still owing on it. So if your home is valued at $600,000, and you still owe $300,000 on your current home loan, your equity is $300,000.
Using equity to build your wealth
The greater the equity in your home the greater your share of your home’s value. This increase may be thanks to an increase in the property market, your dedication to repaying your loan by making additional repayments or a combination of these things. Equity in your home is valuable as it’s building your wealth. It can also be a way to fund a deposit for a new investment property. If you do this with Suncorp Bank, you can borrow up to 95% of the property value (inclusive of Lenders Mortgage Insurance) you’re looking to invest in. But keep in mind; if you borrow more than 80% of the property’s value, you’ll have to pay Lenders Mortgage Insurance.
Enquire online to speak to someone from our experienced team of home loan specialists.
To make the most of your property investment, consider a range of property investment strategies. We’ve described some of the main concepts you’ll need to understand when investing in property below so that you can talk to your Financial Planner about what will suit you best.
Enquire online to speak to one of Suncorp’s expert Financial Planners.
Negative cash flow
Negative cash flow isn’t the only way you can get a break at tax time. Depreciation should also be a crucial part of your property investment strategy. It could be the difference between a negative cash flow property and a negative cash flow property that generates an income for you.
What is depreciation?
Depreciation is the estimated decrease in an asset’s value over time. It’s an expense that you can add to your total expenses of holding the property, increasing your total tax deduction, therefore increasing your tax refund.
The Australian Tax Organisation (ATO) has lists on all the items you can claim depreciation on and for how long. For example, the free standing garden shed in the backyard can be claimed for 15 years, and the old carpet in the bedrooms can be claimed for 10 years.
Money for nothing
If you have bought an older house that you plan to renovate before you rent out, be sure to tell your accountant about everything you remove. You can claim the dirty old carpet you want to rip out and the dusty old curtains you’ve removed, even though you’re discarding it.
How to claim depreciation
A qualified quantity surveyor should be able to inspect your home and prepare a report for your accountant.
If you don’t want to wait until tax time to claim depreciation, you can apply for PAYG Withholding Variation so that your employer applies an adjusted tax rate to you every payday. That means more money in your pocket on payday instead of having to wait until tax time.
Setting up your home loan with features that work for you
Suncorp Bank can help you expand your property portfolio. It’s time to talk to our friendly home loan specialists about setting up a home loan with the features that matter most to you.
This information does not constitute tax advice. You should seek professional advice from your registered tax adviser as to how this product will impact your tax position. Any information contained in this document has been prepared without taking into account your particular objectives, financial situation or needs. For that reason, before acting on the information, you should consider the appropriateness of the information having regard to your own objectives, financial situation and needs. Where the information relates to the acquisition, or possible acquisition, of a particular financial product, you should consider the Product Information Document before making any decision regarding the product. Contact us for a copy.
Loans are issued by Suncorp-Metway Ltd ABN 66 010 831 722 Australian Credit Licence number 229882 (“Suncorp Bank”). To approved applicants only. Fees, charges, terms and conditions apply and are available on request
Lenders Mortgage Insurance
If your deposit is under 20% you’ll need to pay a Lenders’ Mortgage Insurance (LMI) premium. It’s a one-off cost that’s added to your loan amount, so you don’t have to pay anything upfront. It’s important to talk to us about how much this will be – based on purchasing a home for $600,000 with a 5% deposit, it could be in excess of $20,000, depending on the state you live in.