As you go about saving money for your retirement, you have a lot of leeway with the cash you put away. You can put it in a savings account, or invest it in small-time purchases of stocks and bonds. Alternatively, though, you could put those investment dollars toward a bigger purchase. What about a house?
There are few markets stronger than real estate. If you buy property with your retirement money now, it’s very likely to appreciate in value over the next 20 years. For many people, if you can afford a big purchase like a home, it’s probably the right thing to do.
Be forewarned, though, that pitfalls do exist.
Is your purchase a risky one?
If you’re going to purchase property as part of your retirement portfolio, you need to be aware of the specific risks that exist with whatever home you’re considering buying. If something goes wrong, you might find yourself having to pay for a whole lot more than just mortgage repayments.
According to the Industry Skills Councils, the ability to conduct quantitative and qualitative analysis of property risk is crucial. What sorts of issues might present themselves with the home you’re buying? Is it old and decaying, possibly in need of repairs? Is it in an area that’s prone to natural disasters, such as hurricanes? Use both data and your own observations to assess what you might be up against.
Handling the ensuing tax burden
In addition to the fallout from risks that might come up, the other concern you need to think about is taxation. Real Wealth Australia cautions that in addition to making a down payment when you buy, you will also need to hand over 2 or 3 per cent of the purchase price in stamp duties.
A small percentage of this might not seem like much when you’re buying your morning coffee, but with a house, it can be tens of thousands of dollars. It’s important to prepare for this burden. Working with capable Australian mortgage brokers can help you anticipate these challenges.
Find a mortgage broker to help you
Have you decided that despite the challenges involved, you’re ready to begin investing in property nonetheless? If that’s the case, the next step is to speak to us, as we can assist you in that process.