Whether it’s an investment property or a beach house for the summer, buying a second property is a great way to build your wealth. But, just like buying your first home, it can be a struggle to save up the large deposit banks and lenders usually require. Luckily, Darren Walters and the New Home Specialists at No1 Property Guide understand exactly how to buy a second property with no deposit in Australia.
With more than 20 years’ experience in property, finance and lending policies, Darren Walters is one of Australia’s leading property experts. Darren created his no or low deposit new home system to give renters, investors and those who’ve owned before a way to get into the property market without the large deposit usually required.
If you’re ready to get into the property market, whether it’s your second property or you’re a first home buyer, your first step should be to fill out our pre-qualification form. This allows our Investment Specialists to understand your factual options. From there, we’ll simply guide you through the journey and get you into your new property sooner.
Using Equity to Buy Your Second Property
Probably the most common way to buy a second property with no deposit is utilising the equity in your home. Simply put, equity is the difference between what you owe your bank/lender and the value of the property.
So, if your home is worth $500,000, and you owe the bank $300,000. Then you have $200,000 in equity.
You can then draw upon this equity to act as a deposit for another property. However, one thing to note is that you can usually only draw on 80% of the equity (in this case $160,000). Otherwise, you’ll end up being charged LMI and additional fees.
It’s not hard to see how powerful having $160,000 to put towards a new property is. And it’s a fantastic way to climb the property ladder.
At No1 Property Guide, we have helped 100’s of clients buy their second property using equity and a range of other investment methods. Our New Home Specialists can help you maximise your equity and leverage it to build your new property.
Starting your investment journey is simple. First you need to know your factual options. And the best way to discover them is to fill out our simple pre-qualification form. From there, our Investment Specialists can work with you and provide a range of suitable properties that match your investment goals.
Can I Just Go to a Lender & Use My Equity to Buy my Second Property Now?
Unfortunately, no. While having equity can make it easier, you still need to be able to service the loan. As well as meet a range of other terms and conditions that big banks and lenders have. You also need to understand the risks and benefits of using your equity to buy a second property.
The most obvious risk with buying a second property, with or without using equity, is the fact you are increasing your debt. Of course, a good investment strategy, or financial planning, can help mitigate this risk to a low level. But it’s something you should always consider.
Going straight to the lender and requesting to use your equity probably won’t work. As you need to be able to meet their strict lending criteria.
On the other hand, at No1 Property Guide, we take on this burden for you. Our Investment Specialists work to tailor you to lending criteria, improving your chances of being approved. In fact, we have had over a 95%+ approval rate.
We can help you plan an investment strategy. Then we can also connect you to proven and well-respected property managers. Who will ensure your new property (or the old one) is being managed properly.
Of course, we can also help find you the perfect block of land and design your home to be everything you’ve ever dreamt of if you’re thinking of using it as a holiday home or a gift for the kids.
Can I Increase my Equity?
Absolutely! There are many ways to increase the value of your home and make it easier to buy a second property.
One of the best ways to increase your equity is to do renovations or extensions to your home. Clever additions and renovations can add substantial value. Sometimes they can add tens or even hundreds of thousands to your home.
Things like shutting a garage to create an additional room, while adding a carport out the front, can add substantial value to your home. Of course, kitchen and bathroom renovations are always a great idea as well.
However, it’s important to do some careful planning before you go and spend thousands on renovating your property. Spending $10,000 on a new kitchen doesn’t automatically add 10k to the value of your home.
Have a look at popular properties in your area or around the country to see what design and style choices are popular at the moment. In some cases, simply updating the colour scheme and switching our blinds and shades can actually be the best value.
Of course, outside of renovations, there are other ways you can build equity in your home. The simplest method, make additional payments on your home loan. Reducing your outstanding debt increases the amount of equity you have available. This is obviously a long process in most cases but is the most reliable method to build your equity.
How To Buy a Second Property with No Deposit if I Don’t Have Any Equity Built Yet?
If you’re interested in buying a second property, but don’t have enough equity, don’t stress! While equity might be the common choice for most investors, there are still ways you can buy a second property without having to save a large 20% deposit.
One of our popular options is by using Super to invest in property through an SMSF. This lets you build your property portfolio through your Super contributions and rental return. So you can build towards the retirement lifestyle you deserve.
Of course, if you have the disposable income to afford a second mortgage, or are co-buying with other people, there are ways the No1 Team can help.
To understand how we can help you buy a second property with no deposit, simply fill out our pre-qualification form. From there, our Investment Specialists will work out all of your factual options and guide you through the process of buying your next property.