Looking to invest in property? It’s a big step to take and one that is not without its risks. Getting things right from the very start is crucial if you want to fully ride the investment profit wave. Choosing the right mortgage product can tip the balance in your favour, providing you with a more lucrative investment portfolio, rather than stalling after the first property deal. If you’re looking at different investment property loans, read on to be sure you protect yourself from these common mistakes.
1. Signing with a Big Bank without considering Smaller Lenders
It’s easy to trust the bigger, more well-known banks, as they’ve been issuing loan products and have relied on their monopoly in the mortgage market for years. While they may seem to produce better loans for better value, it’s important to really understand what they are offering you. When you’re comparing loans, look beneath the surface and read the fine print. You may discover hidden costs, or a large jump in loan interest after a certain period. This is where turning to smaller banks may actually be more beneficial. Don’t sign anything until you’ve considered all your options. Investment property loans from smaller banks, such as BOQs Variable Rate Home Loan offer the flexibility and repayment options that can often make all the difference in a positive investment experience.
2. Blaming the Lender for any Inability to make a Repayment on your Loan
Legislation dictates that lenders must uphold a greater duty of care when ensuring applicants can actually afford the loans they are offered. While this is true, the responsibility of understanding your financial limits and commitments rests with you. Draw up a budget that incorporates all your monthly outgoing expenses for a better, more informed idea of how much you can afford to borrow.
3. Believing that any Property Purchased will be considered an Asset
This is where you need to tread carefully. It’s true that many lenders will generally accept property as security against a loan, however others have much more stringent criteria. There is so much that is considered when valuing a home; its location, size and features are all elements that impact value. These same elements can be used to determine whether a property is acceptable as security. Always check with lenders prior to committing to the purchase of a property.
4. Failing to Save for your Deposit
There are times when family giving you a helping hand is beneficial, and there are times when it can actually hinder your progress. Did you know that most lenders favour applicants that have genuine savings history? If you’re a good saver, it’s more likely you will be able to make all your repayments.
5. Not knowing what Lenders are looking for
Credit cards, even those that are not overdue or maxed out, can hinder your investment loan application. Lenders will look at any credit cards you may have – including your credit card limits. By doing so, lenders can gauge how much you have available to spend on credit, and if it will impede your ability to make repayments.
Getting the right information to make the right decisions on your investment loan does not need to be hard. Focus not on what lenders are offering, but what suits your current and future budget.