I'm new to property in Australia and have a mortgage balance of about approximately $60K after 3.5 years (down from $450K). Am considering investing in a property to rent out. We have no kids, don't plan to have and think that it would be a good time to buy considering the relatively dull market out there.
Should I continue to pay off the mortgage or start looking for an investment home? Any thoughts would be greatly appreciated.
Thank you
Hi Dielle,
Congratulations on making serious inroads into your existing mortgage – a great effort which has put you in a terrific position to stat investing.
You have so much to learn and there is no need to make hasty decisions. Sit back and spend some time learning the fundamentals of property investment. At this stage you do not need to know all of the intricate, finer details more the broader details. You can do this by reading books (there is a recommended reading list somewhere on this site), reading this forum, asking questions and seeking clarification of your own position.
I would suggest you try work out how an investment property fits into your long term plans. Are you looking for cashflow or capital growth in your properties? Do you have property skills you can use in your investing?
At some stage you will need to find yourself a good broker and there are a few on this board who would be very useful to you. Sit down (can be email or over the phone) and work out what your financial status is. Based on your ability to pay down your mortgage so quickly I suspect you'll get a very favourable response.
Once you have done this background work you will be in a position to make an informed decision. After all you will need to be in control of your own destiny.
For what it is worth – I believe you are in a position to start investing now if you wanted to. Your mortgage is very low and there is no need to pay it off completely. If you choose wisely you could own an investment property which has negligible impact on your existing cashflow. This means you could continue to pay off your home at the rate you currently are.
PS. Make sure you do factor the arrival of kids into your decision making. They may not be in the picture yet but they will be sometime in the future. With this in mind – too much negatively gearing could be deterimental when kids arrive.
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