When you have reached the successful position of being able to start building your investment property portfolio there is a “best approach” to use when selecting a property and the investment property mortgage.
Here are our recommended steps to your investment property journey.
Investment Property Mortgage Tip #1
You may have built up some downpayment capital as well as equity but you must confirm exactly how various financial institutions are prepared to loan you. There are different institutions with different risk appetites and you need to find the one that meets your amount versus cost ratio expectations. When you know your buying power, you can then refine (or broaden) your search criteria). Searching for a property before this step is done will give you a list of, potentially, inappropriate properties.
Remember that passive income from the property will count towards your assets.
Investment Property Mortgage Tip #2
Usually, a twenty per cent downpayment is required but existing equity in another property might be sufficient collateral for the financier. As mentioned above, each lender will have a different risk appetite and, therefore, different attitudes towards deposits. and The criteria for deposits will differ between lenders. A mortgage assistant company [hyperlink to contact page] will make it simpler for you to find a lender with the right appetite for your risk profile. They will also help you calculate the short and long term costs of the loan and the total loan repayment amount.
The mortgage assistant company will advise you on line-of-credit loans, interest-only loans with negative gearing, loan repayment choices, rates, fees and many more aspects.
Investment Property Mortgage Tip #3
Beat other buyers to the deal table with a pre-approved loan. You will be surprised to learn how many deals slip through within days after approval has been delayed.
A word of caution: get your mortgage assistant company to check on any ominous pre-approval conditions.
Investment Property Mortgage Tip #4
Now to find the “golden goose” property. Of course, we are going to say location first. Look for a tenant-rich area and one in which price increases are expected.
Check the characteristics of the property versus the community e.g. is it a starter home for unmarried, young couples and that is the same profile of the community?
What would your tenants want? New families want schools, young executives want cafes and nightlife, etc.
Is the area going through a gentrification phase or is it a new area that is going to receive schools, hospitals, public transport, lots of green areas, etc? This will increase the tenancy opportunities.
Check the rental and vacancy history of the property and get that in writing.
Get your mortgage assistant company to recommend property inspectors, get the all clear and seal the deal.
For the best advice on investment property mortgages contact Simpler for a simpler, more enjoyable property journey.