MortgageDesign Strategies for Boosting Investment Property Revenue
A STEP-BY-STEP GUIDE TO SECURING A HOME LOAN
June 23, 2023
Property Investment loans are just one of the many financing options that you as a real estate investor can take advantage of. These loans are specially designed for investment purchases and generally allow for higher loan balances than traditional mortgages and don’t even have a primary residence requirement like FHA loans. This means you don’t have to live on the property to be eligible for the loan. You can also use multiple real estate investment loans as you work on building a portfolio. With the FHA and other loan programs, you are typically limited to one financed property at a time.
Understand your financial situation :
Before approaching a lender, ensure your financial foundation is rock-solid. Consider all the associated costs of a home loan and
prepare for unexpected income fluctuations. Your finances should be robust enough to
comfortably sustain you for at least 12 months. Remember, being over-prepared is
always better when it comes to home loans.
Determine a budget:
Establish a budget that aligns with your financial situation. Gain a
clear understanding of your income, savings, and existing debts. It’s crucial to have a
financial position that allows for timely mortgage repayments while maintaining a
comfortable standard of living. Lenders typically aim for mortgage repayments to be
around 30% to 40% of your gross income, ensuring affordability. For example, with a
mortgage repayment of 30% of gross income and a median house price of NZD
800,000, an annual income of approximately NZD 96,000 would be necessary to afford
such a property. Remember, this is a simplified estimate and other factors like expenses
and interest rates should also be considered.
Research Lenders:
With numerous home loan lenders available, choosing the right
one is paramount. Seek recommendations from your social circle and conduct thorough
online research. Compare interest rates and delve into customer experiences. Verify
that your chosen lender is licensed to operate in your area and has no history of
regulatory actions to avoid falling victim to scams or unscrupulous practices.
Get pre-approved:
Save time and energy by obtaining pre-approval for your home loan
before you begin your property search. Pre-approval helps you understand your precise
financial position and allows you to focus solely on properties within your means.
Additionally, sellers tend to view pre-approved buyers more favorably, as they are
perceived as credible and capable of making the purchase.
Find a property:
Now that you have a clear understanding of your financial situation,
it’s time to begin your search for the perfect property. Effective communication with your
real estate agent is key – share your specific requirements and budget limitations
openly. Prioritize verifying the credibility of property owners and don’t shy away from
asking relevant questions about the property’s age and neighborhood characteristics.
Gathering ample information about the living experience and available amenities will
empower you to make an informed decision.
Finalize the loan:
Once you’ve identified the property you wish to purchase, inform
your lender. They will guide you through the application process, requiring documents
such as proof of income and identification. The lender will review your information and
establish the terms and conditions of your loan, including the borrowing amount and
repayment structure.
Seal the deal:
Congratulations! You’re now one step closer to becoming a proud
homeowner. During this critical phase, carefully review and provide your final
signatures, along with the required down payment, to proceed with the transaction. Take
the time to fully comprehend the documents you’re signing and address any
uncertainties or queries.Once the lender disburses the loan funds to the seller, the
property title will be transferred to your name.
Manage your mortgage payments:
Now that the property officially belongs to you,
work with your lender to develop a suitable repayment plan. Ensure you make timely
payments to maintain a healthy credit score and avoid incurring late fees. Regularly
reassess your budget to ensure you can comfortably meet your mortgage obligations.
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We take into account your long-term financial goals, turning our focus to ensure that your mortgage structure is well-suited to enable your property portfolio to perform.