Cautiously keen

Our Experts Answer:

A good question and one that I really would need more information on to give an answer too, however I will make a few points. Firstly, in purchasing an additional property you would be at a level that is normally seen as being a bit risky. You want to consider how you would cope if there was a job loss and also budget for interest rate rises. Second, you don't mention where you are living and looking to purchase. Obviously the Auckland market has a lot of heat at the moment and most economists are predicting further rises over the next 12 to 24 months. Where this is good is it means this market is more liquid in case you needed to sell and also you are likely to get some equity gains which would reduce your LVR and give you more of a safety buffer. If you are in a small town which is not experiencing growth be a bit more careful as it may be harder to offload if you need to. Thirdly, have a good think about your interest rate strategy. Fixing can give you certainty around your cashflow, but if you push yourself too tight and need to sell for any reason you are likely to incur break fees.