Professionals Real Estate 
Now is a great time to consider buying an investment property by using the equity in your existing home as security to finance a second property purchase.
In particular, the outlook for the property market in WA for 2015 continues to look positive based on very low interest rates and a sound economy. It is now estimated that one in every five home buyers in Western Australia are investors who are taking advantage of rising property values to buy investment properties.
A very important financial dividend of rising property values in Western Australia over the last 18 months has been growing equity levels, which gives more home owners the ability to consider buying a second investment property. Equity is the amount of money you actually own in your property after taking away the amount owed to the financial institution from which you borrowed the money to purchase the property. For example, if your property is worth $500,000 and you owe $250,000 in borrowings, then you have $250,000 in equity. This would mean that you have 50% equity in your home.
Many homeowners may be surprised to learn how much equity they now have in their own home.
It is significant that the lower and middle sectors of the housing market have performed well during the past year with many of these areas rising at a faster rate than the overall median house price of during the past 18 months. For example, homes in a large number of lower and middle priced areas have risen value by over 10% during the twelve to eighteen months.
Rising property values is important for investors because it means they can use the increasing equity in their home to purchase an investment property. Typically, a homeowner has to have 20% equity in their home before a financial institution will consider making a second loan. Many people do not realise that they can use the equity in their existing owner-occupied home as a form of deposit or security to purchase an investment property.
There are a number of other matters are also taken into account when applying for an investment loan, including the purchase price of the investment property, rental income and the disposal income of the borrower.
Investing in property has proven a good long term secure investment for many people in Western Australia and homeowners should seriously consider the possibility of taking out a second homeloan to buy an investment property based on the growth in their equity in their home.
Thinking about an investment property or want to know more about using equity to invest? Find your local Professionals office for expert real estate advice today.
