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 ensure you 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. When calculating your capacity to repay the loan, we will add a two per cent rate hike 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. This is known as an ‘Assessment Rate’, different lenders have different assessment rates according to their credit policies.
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 begin with, a mortgage broker will use their expert knowledge to sense-check and flesh out your plans.
With access to property data and trend analysis, 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.
Talk to a mortgage broker who can help you get the most out of your property investment. Contact us today.