How to borrow
Investment property loans can be fixed interest, variable interest or interest-only.
“Interest-only has been very popular but you need to be very careful as the repayment amount can jump significantly at the end of the interest-only period,” Conisbee explained.
Many people like property because it’s an investment they can see and touch.
“You get income from the rents, you’ve got potential capital gain and you can renovate it,” Whittaker said.
“Of course, the key to property success is to buy well and add value.”
Conisbee described Australia as possibly one of the most property-obsessed countries in the world.
“The main reason is probably that capital growth has been so amazing,” she said. “If you bought here in Sydney five years ago, for example, your home value would have increased by, on average, 50 per cent.”
Property is an illiquid asset. “If you need money, you can’t sell a back bedroom,” Whittaker pointed out.
It also has high entry/exit costs and you’ll need mortgage insurance if you borrow more than 80 per cent of the value of the property.
“One of the biggest risks is that you’ll be without a tenant for a length of time,” Conisbee said. “This can result in quite a significant loss of income.”