Looking at Raglan

Question from Anne Maree updated on 26th May 2015:

I'm looking at my first property investment but am very cautious. I have a mortgage-free house but no cash. I’m 55 with one income of around $70,000. I’m considering a bach in Raglan as both a long-term investment and also for my own use (although it would need to be rented or partially rented).

Our expert Kris Pedersen responded:

Firstly you need to take some tax advice to understand the implications of purchasing a holiday home and how the changes to the tax rules in regards to this a couple of years back may affect you. Secondly you need to have a think about what you are wanting in an investment and what returns you are wanting to achieve and if a bach will give you this result. Or if another investment may be a better fit. Also if you do proceed with a purchase, rather than offering your current home and the purchase to one lender as security, look to raise a 20% deposit against your existing home with the remaining 80% raised through another lender. This way your two properties won’t be cross secured.

Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz

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