In the past, it might have been easy to get a loan to buy an investment property or to fund a project. However, today banks hold onto their money much more tightly, leaving many a hopeful wondering how to get an investment property loan. It’s not quite as easy as filling in the relevant paperwork, but the process could be much smoother if you consider these steps before even picking up the phone to your potential lender:
Lenders are much more likely to look favourably upon you if your deposit is considerable.
By investing a large sum of your own money into a property, you’re showing that you’re serious about this venture. Often the worry is that people taking out big loans don’t see it as real money, meaning they might not be truly considering the consequences if their investment doesn’t work out. By investing your own hard earned cash, you can show that you mean business and you’re willing to pull your weight in this agreement. Down payments can come from savings, or you could consider using equity to purchase a property.
You might have shown you’re serious, but are you trustworthy? This is where your credit rating comes in. It might not be something you think to check up on very often, so it’s really important you do before you apply for any kind of loan. A good credit rating comes from always making repayments on loans, credit cards and overdrafts on time.
If you’ve recently had a bit of a slip, then it might be worth waiting a while until you can even out your rating again so you’re no longer in the red. By paying back what you spend straight away, you’ll be seen as trusted by lenders.
Those keen to invest in a second property who don’t have the cash for a down payment should consider looking towards smaller lenders. Big banks often require bigger sums of money and stellar credit reports. So if you had a rough patch where you missed your mortgage repayments then a smaller lender could be more sympathetic.
At Pearl Financial, we’re more than happy to offer our assistance and can give you that all important advice. Get in touch today to discuss your property investment options.
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