Purchasing an Investment Property in Queensland

Have you been toying with the idea of starting your investment portfolio and making your first investment property purchase? Or have you already made that first step and now looking to add another investment property to your growing portfolio?

If you have answered YES to either question then read on because there is positive news for you.

Investing in Queensland Property

Just last week, the release of the BIS Oxford Economics’ Residential Property Prospects 2019-2022 report has predicted that the highest rise in property prices will be seen in Queensland.

Brisbane is expected to see a 20 percent increase in the next 3 years, with the Gold Coast and Sunshine Coasts not far behind. It is believed that prices will remain modest throughout the next 12 to 15 months as many construction works come to completion and there is still an over-supply of new properties. However, as this settles over the next 12 months or so, prices will start to increase.

So, is now the right time to buy? This prediction of property value increases in the Sunshine State indicates that it is.

RBA Interest Rates

Coupled with this is, of course, 2 official interest rate cuts by the RBA that we have just seen in June and July. Interest rates are now at an all-time low, with some very attractive investment rates in both the principal and interest and interest-only lending and with variable and fixed options. Who would have imagined 6 months ago that we would see investment rates from around 3.5%?

Lending Standards

Another game-changer has been the decision from APRA to loosen the buffer required for lenders to use in calculating the servicing of a loan. Up until a month ago, lenders worked off a floor rate of 7.25%. For example, if you were looking for a loan that was 4%, lenders would work off the rate as being 7.25%, to allow for any rate increases, in working out whether you could afford the repayments.

Now, a buffer of 2.5% is added to the interest rate so servicing is now worked at the rate being 6.5% on that 4% example. This presents a huge opportunity for borrowers seeking new investment credit.

Again I ask, is now the right time to buy an investment property in SE Queensland? Coupling the property price predictions with the easing of lending calculations and lowered interest rates, the indicators are saying ‘yes’.

If you are going to leap into the world of property investment, there are a few decisions you need to make.

Investment Property Strategy

Your first decision will need to be around what your strategy is. Are you going to buy and hang on to it for the long term? Are you going to buy and only keep it short term? Are you going to buy and renovate to make extra profit?

Your answers here will then help your Gold Coast Mortgage Broker determine whether you apply for principal and interest repayments or interest only for a short term. We’ll also determine whether a variable loan or a fixed term would best suit your needs.

Make sure you set a budget, the same as any other purchase! Don’t forget you’ll have purchase costs like stamp duty and legal fees. Some loans may have an application fee or a valuation fee that will need to be paid upfront or at settlement.

Set a budget

You will need a deposit and when it comes to investment loans, many lenders will not lend more than 80% of the purchase price. Some will go as high as 90%, but then you will have to pay Lenders Mortgage Insurance on top of your loan. Your budget also needs to include costs that will continue after the purchase such as insurance, rates and water, property maintenance, agent management fees and possibly body corporate fees.

You should also include the income that you will receive in rent from your new property. This can be used in the servicing of your new loan but will be shaded to 80% for servicing purposes. Will you end up being out of pocket when it comes to making your new mortgage repayments?

Your hfinance Gold Coast Mortgage Broker will sit down and discuss all of this with you before we step into the application process.

You may also wish to consider who it is that you want to have living in your investment property. Do you want young families with small children as your tenants? Then you should look at houses in a central area around schools and childcare facilities. Would you rather young couples with no children as tenants?

Perhaps you should be looking at units or apartments with an easy commute to the city. There are so many different scenarios to keep in mind when making this decision. Just focus on what drives you and what you are trying to achieve.

Your best plan of attack, once you have made the decision to purchase an investment property, is to contact your local Gold Coast mortgage broker to discuss your position, your options and then apply for a pre-approval.

Having a pre-approval will make it much easier when you are out actively searching for a property because you have the peace of mind knowing how much you can spend up to. Pre-approvals are usually valid for 60-90 days, so there is no major rush to find the right investment property for you.  

Hi, I’m Kirstie Penton and I’m your local Gold Coast Mortgage Broker. Give me a call today and we can meet for a coffee and a chat about your goals, your circumstances and how I can assist you in making them a reality.

Contact by calling us on 1300 928 227 or email info@hfinance.com.au. hfinance is a mortgage brokering business – click to speak with a Sydney Mortgage Broker, Gold Coast Mortgage Broker or an Australian expat mortgage broker.