Q How much of a deposit is needed to buy an investment property? Can I buy one just using the 50 per cent equity I have in my own home valued at $1.3 million?

A With bank funding, you are looking at needing a 30 per cent deposit for existing properties and it’s generally best to work off a 20 per cent deposit for new builds. Based off you having a $1.3 million personal residence with a $650,000 mortgage you have about $390,000 unutilised equity, which is the usable equity you can use for deposits. This is 80 per cent of the value of your home, minus the existing mortgage. So if you used the $390,000 as a 30 per cent deposit, you potentially could purchase investment properties up to $1.3 million. Please note: this is just looking at the equity side of your position and you will still need to pass the lenders affordability requirements.

Kris Pedersen

krispedersen.co.nz