Creating wealth through residential property

Despite the doom and gloom often reported in the popular press, the Australian Bureau of Statistics house price indexes shows that house prices were still on the rise across all capital cities in the 05/06 financial year.

Predictions¹ that rental returns are set to rise due to the downturn in the supply of new dwellings is a further reason to again consider investing in residential property.

"In a market that has seen some nervous 'jitters' of late, primarily due to rising interest rates and fuel prices, residential property investment stands out as a convenient and long-term method of creating personal wealth," said Brendan Casey, Residential Mortgage Manager at Medfin.

"There's no doubt that the value of your residential investment property will rise and fall during the period of your investment. However, it's important to remember that today's value is only relevant if you need to sell today. Generally, long-term residential property investment continues to be tax-effective whilst providing an income stream."

Higher interest rates are arguably an indication that now is the time to buy. When interest rates are high, competition in the property market with first homebuyers or owner-occupiers is typically reduced; demand for rental accommodation also increases as first homebuyers wait for rate reductions before jumping in.

"Medfin has recently launched a new breed of residential investment property loan that allows its clients, in most cases,² to borrow up to 100% of the property purchase price with none of the insurance premiums usually charged by the major lenders," Mr Casey said. "This means that you can leave your money free to maximise the growth of your wealth.

"The interest rates are competitive. And with a choice of line of credit, fixed or variable rates, interest only or principal and interest, the loan allows you to choose the repayments that best fit your budget. If you're thinking of investing in residential property, shop around and find a Residential Investment Loan to get you started."

References
1. BIS Shrapnel Senior Project Manager, Jason Anderson in Rents to rocket due to housing shortage, Sydney Morning Herald, November 2 2006.
2. Subject to credit assessment.

Important information: Available to approved customers only. Terms and conditions available on application. Fees and charges apply. Because we do not know your personal objectives please consider whether this type of finance is appropriate for your circumstances Please also seek independent tax advice as to whether this type of finance is appropriate for your needs.