These days people are more intersted in investing in properties. The investment may range from long term (for retirement) to short term (capital growth while a housing boom is going on). But, what it is suggested is to keep the long-term view in mind when you wish to buy the property and hold it.
We always emphasize on buying the right property, but financing should also be equally emphasized on. This is because determining the amount of finance your property requires is very important. You have to get your financing done right otherwise you will not be able to diversify your borrowing options, which in turn creates a large property portfolio for you!
Here are 10 important financial tips for property investment which should be positively kept in mind-
Different lenders to be consulted
Generally keeping in mind the loyalty factor, people stick to just ne lender. But what actually happens is one lender reduces the amount that you can borrow. Moreover, it can also increase the factor of risk as a single lender gets a chance to evaluate all the properties in a combined way rather than e
valuating them individually. If you have a look at different lenders, you will get the best deal possible to increasing the ability of borrowing.
Plan is the key to success
Staying true to its essence, planning or strategies are very important financial tips for property investment. An investor should plan a detailed strategy in order to let their property portfolio grow. Plans for financing and a cash flow analysis should also be prepared.
Ignore the credit a little
It may sound insignificant but if you reduce the limit of your credit card, it actually affects the amount you can borrow for your property. Also, don’t to forget to cancel the credit cards that are no longer in use by you. This is because they can become an important part of consideration by the lenders when they decide how much amount you are capable of borrowing.
Try to provide security on just one property
When you give your lender security on more than one property, various problems are caused. Sometimes, when the value of property increases you won’t be able to release your equity. If you think some other lender is providing a better deal, you will face problems as the present lender will not release their mortgage to give you a chance to get your property refinanced.
Loan should be structured properly
If your loan is not structured in a proper manner, numerous problems will come your way. They may include a reduction in flexibility and increase in risk. Through multi-securitisation, an improperly structured loan will work against the flexibility. If the lending on investment and home is not segregated, the risk factor will reach its peak. And most importantly, you can also miss the deductions available with you.
Keep the security in touch
When you provide more than enough security to the lender, it can actually back-fire you as they will restrain investment potential. Lenders are never satisfied, no matter how much security you provide them. And therefore you should regularly inspect the value of your property and also get them checked again with the banks. By doing this, there are chances that you will be able to get rid of the security from your investment properties.
Personal debt should be combined
If you get an opportunity to combine the personal loans that have a high interest rate then you should immediately go for it. This is because they not just cost you an increased rate but affect your borrowing potential too.
Experienced mortgage broker
The most basic financial tip for properties investment to be kept in mind is to consult a mortgage breaker who is immensely experienced in investment properties. An amateur can increase your risk factor.
Keep a line of credit
When you are getting involved in something risky as investment in properties, you should be prepared for the worst. You can do this by preparing a cash reserve from the start in the form of line of credit. So, when the times get tough, you will still have a buffer.
Principle and interest
If you organize your loans for investment with the interests, it will be beneficial as your borrowing potential will be improved. Moreover, you can also pay back the amount of principle when you want.
Following the properties investment tips is highly preferred as the loss in this case is major and sometimes, unrepairable.