Borrowing Capacity

Borrowing with a buffer may be the only risk minimisation action you can put in place.

Essentially, this means that if all goes wrong, make sure you have either equity or savings that you can use to cover the additional costs so you don’t have to sell the property at a Fire Sale Price that’s unacceptable to you.

This allows you to buy time.

If you’re using equity from your home to buy an investment property, and you need $100,000 to cover that $400,000 property, and $80,000 for the 20% deposit and stamp duty and legal fees of $20, may consider tapping into the equity with a buffer.

So instead of borrowing the hundred thousand dollars, you borrow $120,000 giving you a $20,000 buffer in case you lose your job or you can’t rent the property out or your renovation goes over time or budget or is delayed…

Borrowing with a buffer allows you to have some extra time and it’s something you might want to consider.

Make a time to talk with one of our experts https://investorschoice.com.au/bookacall

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