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What does it mean to have equity in your home? Equity is the difference between the current market value of your home, and what you still owe on it. Equity in your home can help you achieve your property goals. How do you calculate total equity? You can use a simple formula to work out the equity in your home. You will need a property valuation for an accurate figure, but if you know the current market value of your home, you can minus what you owe on your home from that value: Example: $680,000 (market value) - $300,000 (mortgage balance) = Equity of $380,000. Note: You can borrow up to 80% of the property value. If you need to borrow more, you will have to pay lenders mortgage insurance. A property valuation is an important factor in determining equity, and therefore your ability to purchase another property. How to build equity in your home Your equity increases when your property value goes up, and your mortgage balance reduces. Tips for building equity include:  Making renovations and improvements to your home to increase its value.  Making larger mortgage repayments.  Saving money by opening an offset account, so your savings are offset against your loan balance, reducing the interest paid on your loan. Using equity – how does it work? After gaining a property valuation, (we will organise this for you) and assessing your ability to repay an investment loan, once approved we will take security over your home and your investment property. Depending on your situation, you may be able to borrow against the equity and take on an additional loan, or increase the loan you have currently. What additional factors do I need to keep in mind? Borrowing against the equity in your home is not always guaranteed. A lender will take into account a number of things, including your income, existing debts and whether you have dependent children. As with any property, the purchase price is only one component of the upfront and ongoing costs you’ll need to pay. Stamp duty, legal and conveyancing fees, and building, pest and strata inspection reports, can all be applicable and will need to be budgeted for when you do your pre-planning. Things to consider  How much will loan repayments increase by and can you afford them? Use our budgeting calculator to find out.   Do you have the savings to accommodate for government and additional costs?  Who will manage your investment property and what rent will you charge?   Are you across the legal obligations that apply to landlords?   Will you be eligible for tax deductions?   Be aware of any restrictions on your home loan that can prevent you from making additional repayments or accessing the equity in your home.  Talk to a Horizon Bank lending specialist today about how you could use equity for your next property venture. Horizon Bank has a branch network spanning the NSW South Coast and Illawarra. Horizon Bank branch locations: Albion Park, Bega, Bermagui, Berry, Merimbula, Moruya, Nowra, Thirroul, Ulladulla & Wollongong.  The content in this article has been prepared by Horizon Bank for general information only and it is not intended to be professional advice. It does not take into account your objectives, financial situation or needs. You should seek your own legal, accounting, financial or other professional advice where appropriate, and consider the relevant General Terms and Conditions before deciding whether to acquire any products or services offered by Horizon Bank and/or its affiliated partners. We do not recommend any third party products or services referred to in this article unless otherwise stated and we are not liable in relation to them. Any links to third party websites are for your information and we do not endorse any content on those sites. Horizon Credit Union Ltd ABN 66 087 650 173 AFSL and Australian Credit Licence Number 240573 trading as Horizon Bank.

Buying an investment property can be an overwhelming process, especially if it is your first time researching property investment. That’s why we have put together the top 5 things you should consider when making this purchase for your future. Clarify your goals and do your research Smart property investment starts with asking yourself, why am I investing in the first place? Will buying an investment property affect my lifestyle and current circumstances? You’ll need to decide whether you’re buying to make an income now, or as a longer-term investment. Researching different property types and suburb profiles will help you clarify what you’re after. When you have found a property you're interested in you can then research the property’s potential for capital growth, rental income and ongoing costs. Choosing a property type Apartments, units, townhouses and smaller homes are attractive options for investing in property. If you’re keen to renovate, find a property that could use a little TLC to increase its value over time. Properties that have a wide appeal and many features will make it more attractive to potential buyers. For example, a property near shops, transport and with a garage and second bathroom will appeal to families, retires, couples and single professionals. Where to buy? Buying in a familiar area you have grown up in or lived in for a while will take you less time to research. Speak to local real estate agents for their take on the area and check recent sale prices to give you an idea of what you can expect to pay for local properties. New suburbs and estates are growth areas where there is potential for capital gains and higher rental yield, that is properties with higher rent compared to the property value. Find out about the vacancy rates in the neighbourhood. A high vacancy rate may indicate a problem with the area which could be anything from crime to inadequate infrastructure and public transport. Buying property in an area with high vacancy rates could make it harder to rent the property out, or sell it in the future. Look at the local government website to find out about proposed changes in the suburb that may affect future property prices. Things like new developments or zoning changes can affect the future value of a property. Consider the costs Aside from the purchase of the property, there are initial and ongoing costs that first time property investors need to be aware of. We’ve broken them down for you here. Initial Loan deposit Loan Establishment Fees – these may or may not be applicable to your investment loan. Mortgage Insurance – only payable if your deposit is less than the amount required by your financial institution. Utility Connections Stamp Duty - Stamp duty costs will differ from state to state and will depend on the purchase price of the property. Use our stamp duty calculator to estimate stamp duty costs. Legal Costs – transfer of ownership of the property title will require a solicitor or conveyancer.                 Ongoing cost of investing in property Insurance (Building & Landlord) - Building and landlord insurance will not only protect you from unforeseen building damage, but also common tenant problems i.e. damage or the tenant refusing to pay rent. Check tenant damage is included in your cover. Yearly Mortgage Fees – these may or may not be applicable to your investment loan. Land Rates                                 Body Corporate Fees – may be applicable if you have bought a townhouse, villa or unit. Mortgage Repayments – if rental income doesn’t cover all of your repayments, you’ll need to budget to cover the shortfall. Utilities - You can opt to pay only the connection services. Discuss the best option with your property manager. Property Management – property management fees can vary, they generally charge a letting fee and a management fee based on a percentage of the gross weekly rental. This is usually between 5 – 12 percent. Repairs - As the landlord, maintenance is your responsibility. Some repairs are tax deductible so it’s a good idea to keep all receipts and invoices. When is it the right time to buy an investment property? The best way to invest in real estate is to find the right time for you. This will depend on your affordability and borrowing power. If you have extra savings, have found a property at a reasonable price and mortgage rates are low, it could be an opportune time to buy an investment property. Having equity in your home will also appear favourable to a lender as you have reduced the amount of debt owing. Speaking to a financial planner and accountant to assess your situation is a good place to start to help with decision making. Let our team at Horizon get you on the path to property investment success. Get in touch with us today and let us help you on your journey. Horizon Bank has a branch network spanning the NSW South Coast and Illawarra. Horizon Bank branch locations: Albion Park, Bega, Bermagui, Berry, Merimbula, Moruya, Nowra, Thirroul, Ulladulla & Wollongong. The content in this article has been prepared by Horizon Bank for general information only and it is not intended to be professional advice. It does not take into account your objectives, financial situation or needs. You should seek your own legal, accounting, financial or other professional advice where appropriate, and consider the relevant General Terms and Conditions before deciding whether to acquire any products or services offered by Horizon Bank and/or its affiliated partners. We do not recommend any third party products or services referred to in this article unless otherwise stated and we are not liable in relation to them. Any links to third party websites are for your information and we do not endorse any content on those sites. Horizon Credit Union Ltd ABN 66 087 650 173 AFSL and Australian Credit Licence Number 240573 trading as Horizon Bank.

The benefits of buying an investment property include:  Ownership of a secure asset  The future sale and benefiting from capital gains  Rental income to cover loan repayments and other associated expenses  Building equity  Taxation benefits Four main factors to consider when you decide to purchase an investment property is property type, location, growth and demand. Property type You should consider the type of property you would like to purchase and which will meet your budget and goals. The type of property that you decide on will determine the level of rental income you can receive and may change depending on the upfront and ongoing costs. Location When choosing an investment property it's location, location, location! Will the property value increase over time? Will it provide you with adequate income? Other factors to consider also include proximity to public transport, schools, childcare, shopping facilities and parking. These are important to attract tenants. Growth Consider how the potential investment property has performed over the previous decade and how it's likely to do in the future. Do some research of property prices in the suburb and surrounds. It would also be beneficial to consider the population growth, property prices and potential rental income of the area. Also consider new property and off-the-plan developments which may impact future rental income. Demand In relation to growth, demand is vital for investors. You don’t want to purchase an investment property in an unpopular area or without the features that tenants are looking for. Features high in demand are internal laundries, balconies, parking spots & lock-up garages, built-in cupboards and good storage space. Also consider any renovations that may be necessary and could potentially add value to the property. To see how much your repayments will be use our Loan Repayment Calculator, or use our Borrowing Power Calculator to see how much you could comfortably borrow. Better still, have a chat with one of our lending specialists. They'll be able to take you through options, help you calculate how much you can afford and help prepare you to take your next steps. Get in touch with Horizon Bank today about our investment loans. The content in this article has been prepared by Horizon Bank for general information only and it is not intended to be professional advice. It does not take into account your objectives, financial situation or needs. You should seek your own legal, accounting, financial or other professional advice where appropriate, and consider the relevant General Terms and Conditions before deciding whether to acquire any products or services offered by Horizon Bank and/or its affiliated partners. We do not recommend any third party products or services referred to in this article unless otherwise stated and we are not liable in relation to them. Any links to third party websites are for your information and we do not endorse any content on those sites. Horizon Credit Union Ltd ABN 66 087 650 173 AFSL and Australian Credit Licence Number 240573 trading as Horizon Bank.