In Australia, we’re passionate about property. And whether you’re buying your first home, looking to invest or maybe downsizing, you’ll find information here about the different ways property can help build wealth.
How can I use property to make me better off?
It’s a good question. And there’s more than a single answer. How you may be able to use property will depend on your stage of life, what you want to achieve and the risks you’re willing to take. Because like all investment strategies, property involves some risk.
If you’re starting out and aiming to buy your first home or winding down from work with the goal of improving your retirement lifestyle, you’ll have different aims than a property investor.
If you’re a first-home buyer, finding a place to call your own can be exciting. It’s a time when you can say goodbye to renting and to start building equity and wealth for your future.
Buying your first home can seem like a big commitment—and it can also help make you better off.
If you already own your home, you may have bought your home years ago. You might be at the stage now where you’re thinking about winding down from work and downsizing.
If you already own your home, you may have bought it years ago and you’re thinking about winding down from work and downsizing to a smaller place and drawing on some of the value in your home so you can enjoy retirement.
Downsizing to improve your retirement lifestyle
Downsizing is just one of the ways you can use property to improve your retirement lifestyle. But make sure you think through the trade-offs carefully because once you’ve downsized it may not be possible to go back.
If you’re a property investor, you’re going to have different aims than those of a first homebuyer or someone who wants to downsize.
Invest in property
And there are several ways to invest in property—owning and selling properties is not the only way. It’s just one option.
One investment strategy has the potential to make the most of your property whether you’re a property investor or a home owner.
Debt recycling can help you own your home more quickly and build wealth at the same time. It involves risk though so it’s something you’ll need to look into thoroughly before considering it as a strategy for you.
Debt recycling involves borrowing part of the value you’ve built up in your home to buy investments that have the potential to give you extra income and reduce your tax. The idea is that the extra income is channelled into your home loan so you can repay it faster. And it’s a strategy designed to be repeated—so you’d keep investing and ideally generating more income.
A successful debt recycling strategy can help you repay your home loan faster and build the size or number of investments you hold. It’s one way to build equity and wealth.
Like any strategy involving debt, there are risks. For example if you were to borrow too much using your property as security—and an investment turns out to be a bad one—you could put your home at risk. So make sure you understand and consider all the risks beforehand.
In Australia, many people can gain benefit from property investment through a property investment trust using their superannuation fund or self-managed super fund.
Wherever you are in life and whatever your goals, if you’re thinking about using property to build wealth remember to consider some important factors:
- the costs of owning property
- how you’ll find the right home loan for your needs
- whether you’ll be unlocking the equity in your home
- any tax implications
- the risks involved if you are ever unable to repay your debt, or your investment doesn’t work out the way you expect.
There’s a lot to think about. Q& covers all these topics and more—have a look and discover how your property may help you to build wealth and be better off. Of course before making any decisions, think about your own circumstances and weigh up the options or seek advice to work out the best way for you.
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It’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions before deciding what’s right for you. This information hasn’t taken your circumstances into account.
This information is provided by AMP Life Limited. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice.