
Investment Loans
Not sure where to start if you wan to get an investment loan?
Have a quick read below to get to the nuts and bolts of getting an investment loan
The conditions for investor house loans may be a little more stringent now that many banks and lenders have tightened up their stress tests and other standards for non-owner-occupied properties. You will have to provide evidence that you have a specific sum of money put aside to pay the mortgage. The amount of the funds you must set aside may be more if you already have an investment loan than if this is your first mortgage. For each property, this will normally be assessed in terms of a specific number of mortgage payment months.
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As part of your application, You might be asked to provide recent financial statements, pay stubs, tax records, verification of the sale of your property, and records of your current assets and liabilities.
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Since you might be able to pay your mortgage and other expenses with the rental income you'll likely get, this amount might also be taken into account when applying for investment loans. This means that the investment may not truly reduce your debt-to-income ratio, which is one of the criteria used to determine whether or not to approve your loan (i.e., the proportion of your monthly income that goes towards paying down your mortgage).
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Mortgage lenders also take into consideration the potential appreciation of your property over the course of the home loan. Both you and they may want to review information about vacancy rates for the area or property as well as trends in housing prices. These factors will come into play when you have your property valued.
Choosing the right home loan for your investment
When requesting a home loan, it's crucial to be honest about your plans for a property. It could be tempting to try to get an owner-occupier mortgage regardless of the circumstances due to the variations in rates, but loan agents are trained to determine whether their customers are perpetrating what is known as "occupancy fraud."
The level of risk that typically goes along with each type of house loan accounts for the variations in interest rates. Among other things, the risk of default is typically higher with investment properties, increasing the lender's exposure.
If you're buying an investment home, there are better ways to make sure you're getting the best mortgage rates available. The same tried-and-true advice applies regardless of the sort of loan you need: reduce your current debt, raise your credit score, and demonstrate your ability to repay a mortgage.
Speak with one of our finance consultants today to discuss refinancing whether you're ready to move into your investment property or transform your house into an investment.