Buy now or pay later?

First time investors often find themselves with a difficult choice: Buy now, with a smaller deposit, or save for a larger one and enter the market later. Jennifer Duke looks at the options available and the implications for an investment strategy.

Coming up with the funds for that first investment property purchase can be tricky, and that includes deciding how to use any savings you have to date.

While 20 per cent of the purchase price is generally accepted as a ‘standard’ deposit – requiring an 80 per cent loan to value ratio (LVR) loan – loans of up to 95 per cent LVR are also available. That would allow you to put down a deposit of just 5 per cent.

Therefore, there are two options: pay a smaller deposit now and take out a larger loan, or hold off until you have saved enough for a larger deposit.

Either way, the choice you make will affect your overall investment strategy.

However, the amount of your monthly repayment is only one of several important differences between the two loans.

READ the full article in the latest issue of Smart Property Investment – ON SALE IN NEWSAGENTS NOW

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