Investment property calculator

A successful property investment has the potential to increase your wealth and provide financial security for you and your family. However, investing in real estate is not an instant road to riches. 

Buying an investment property has a lot of associated costs. Aside from loan repayments, you have to think of stamp duty, deposit, insurance, and more. This can be a heavy load especially if you haven’t paid off your first home loan yet. An easy way to find out if an investment property is an affordable endeavour is by looking at your finances and using investment property calculators. 

Here are some things to consider before buying an investment property: 

Can I afford an investment property?

Knowing your borrowing capacity can help you figure out if buying an investment property is the right choice. Using a borrowing capacity calculator, you can see how strong your borrowing power is based on your income and expenses. The calculator offers a general guide so you can better understand your budget. 

For a more accurate idea of how much you can afford, speak with a lending specialist at loans.com.au or apply for a pre-approved investment home loan. 

Once you have an idea of how much you can borrow, a home loan calculator can help you estimate how much your investment property loan would cost. You’ll also see how much interest you’d pay overall and your monthly repayments. The result of this calculator will generally be based on your loan amount, interest rate, and loan term. 

Take note, loan repayments are not the only thing you need to pay for when investing. You’ll have to pay for insurance, stamp duty, maintenance, property manager fees, and land tax to name just a few. Budgeting first and seeing how much you can afford is imperative. 

Are extra repayments for investment loans a good idea?

If you want to reduce the overall interest of your loan, making extra repayments or lump sum payments could be beneficial. These additional payments could also shorten the loan term which means owning your investment property sooner. 

Making additional payments aside from your regular repayments may seem more of a financial burden. But, if you have extra cash flow or income from your investment property, it may be a good idea to put it back towards the investment home loan. However, there are possible tax implications when making additional repayments to your investment loan. Be sure to speak to an accountant or financial advisor before making any final decisions.  

Use an extra and lump sum payment calculator to get a better idea of how much you can save you over the life of your loan. Having an estimate and adjusting the extra payment or lump sum amounts can help you figure out how to make the most of your loan. 

Should I buy a negatively geared investment property?

Negative gearing is a popular investment strategy for real estate investors. A property is considered negatively geared when the cost of owning it exceeds the income it generates. You may claim the taxable loss as a tax deduction against your taxable income. The capital gain from the property could also outweigh the potential losses. 

Of course, like with any investment strategy, negative gearing has its drawbacks. Since you’ll be losing money on the property, you need to be able to cover your losses until you can recoup the tax advantages. As an investor, you should also consider how market trends and rate changes could affect your investment property. 

When deciding what type of investment property to buy, it’s best to calculate potential tax savings by using a negative gearing calculator. Doing so will help you figure out if this investment strategy is right for you and how beneficial it would be given your financial situation. 

How much can I borrow with my SMSF?

Leveraging your SMSF or self-managed super fund to purchase could be a good idea for those who want to be more hands-on with their super funds. Using an SMSF for your real estate investment could provide you with tax benefits and give you more security when it’s time to retire. 

When you purchase an investment property with an SMSF, you need to know how much you’re allowed to borrow first. You can compute your maximum SMSF borrowing capacity using an SMSF borrowing calculator. This will provide you with an estimate which can help you figure out what type of property you can buy using your SMSF.

Will capital gains tax affect my property investment?

Capital gains tax refers to the tax you have to pay when you sell an asset, shares or investment for profit. In this case, if you’re selling an investment property, you have to pay a corresponding capital gains tax.  

Typically, you pay this tax when you have capital gains. If you have a net capital loss during an income year, you won’t have to pay capital gains tax, or it could be carried over to offset future capital gains. 

Capital gains tax could affect your profit margins if you’ve sold the property for more than it costs you to purchase. The next question you should ask is ‘by how much?’. To make things easier, you can use the capital gains tax calculator to see an estimate. You can use this to guide your investment strategy. 

Finding the right investment home loan

Getting the right mortgage for your property investment is essential. The ideal loan has competitive interest rates, favourable mortgage features, and flexible terms. At loans.com.au, we offer a range of investment home loans for you to choose from.

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