Pay off your mortgage or invest the cash?

In the tough Sydney property market, people find even purchasing a first home challenging. If however, you are in the enviable position of being home owner with equity, you could consider using that equity to purchase an investment property.

Factors to consider when looking at purchasing a second home:

- Are your current home loan repayments

- Do you have equity in your mortgage?

If the answer is yes, then you could potentially borrow the full purchase price of the investment property as well as the transfer costs (stamp duty and legal costs) against the equity in your
current home.

Daniel Pym of loan market says "If you are still strapped financially we would advise you to start out with what is termed an ‘interest only’ loan, which would keep repayments low. This also makes sense from tax perspective as interest on an investment loan is tax deductable, thus making purchasing an investment property a smart and affordable decision".