When you’re trying to secure finance for an investment property, it’s important to keep a few simple rules in mind to make sure you get the best deal possible and will be able to afford the repayments, come what may.
If you’re thinking about purchasing an investment property, it’s important to manage the risks adequately. For example, you shouldn’t rely on rental returns as a guaranteed income to meet loan repayments, as there are times when a property may be vacant or hard to fill immediately and some months the rental return on a property may be diminished by maintenance costs.
A mortgage broker will help a borrower find the right product, so that he or she can afford the repayments. Upon receipt of the loan submission the lender will generally add approximately two per cent onto the rate the borrower will be looking to take, to make sure they can still make repayments if, or when, mortgage rates go up.
Most investors will already have put some thought into where they would like to invest and will have an approximate price-range in mind. While a loan calculator is a great resource to start out with, a finance broker can use their expert knowledge to sense-check and flesh out your plans as loan calculators are mostly used as a guide as they don’t take into account all of your circumstances.
Mortgage brokers also have access to property data and trend analyses like RP Data’s, a mortgage broker can pull property reports for you, detailing how the area has performed in the past as an investment, the average median house price or rate of return and how much the property values have increased over the past five or six years. These are details that investors generally can’t access. Some mortgage brokers are also able to provide you with a property report on the security you’re looking to purchase to give you a guide price.
Even better, if you meet a local mortgage broker in the Inner West (hint hint!) as they will know that particular market and be able to provide a lot of detailed information from working there every day.
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