Applying For An Investment Property Loan
You’ve heard that investing in property is a great way to build your wealth, and has relatively minimal risk: however, working with a solid investment plan takes time, money, and devotion. When it comes to financing your chosen property, there are a wide range of different loan products with their own advantages and disadvantages…but first, you’ll need to navigate the application process!
1. Determine how much you can borrow
Your borrowing power is determined by a review of your financial situation: whether you have a stable job, manageable expenses, your current savings and credit history . This information is required as the lender needs to know that you will be able to make your repayments, and pay off the loan in time.
On top of the property’s estimated purchase price, you’ll need to factor in the deposit (typically 5-10% of the property’s price) and add on extra fees such as stamp duty, legal & investment home insurance costs, and taxes before arriving at the full loan amount required.
2. Gather Documentation & Choose A Loan
In order to apply for a loan, you’ll need to supply your broker (us!) with documents as proof of your:
3. Other loans and savings you currently have
Depending on your circumstances, you may need other documents, which your broker will advise you of. In terms of choosing the right loan to finance your property, your broker will consult with you the different features and terms that will suit your needs best!
Get Loan Pre-Approval
Pre-approval’ refers to when a lender approves a maximum amount to lend you based on a full assessment of your financial situation, and the type of investment you’re making. Getting a pre-approval for your investment home loan will guide you in budgeting for your property, as well as getting you ahead of other potential buyers of a property. Having pre-approval means a seller will consider you more seriously as a buyer, and gives you more power in negotiating a purchase price with them.
Buying The Property
After you have made an offer for your chosen property, you pay the required deposit and a Contract of Sale will be drawn up by the real estate agent (or conveyancer/solicitor). The contract details your offer, the date of settlement, and other terms and conditions you will need to meet before the sale is finalised.