The overwhelming majority of us will need to apply for a loan to be able to purchase another investment property. We sat down with Greg from Custom Financial Solutions to get his top loan tips for application success.
Good advice is important
Applying for a loan is not always straightforward. “Each lender out there has different credit policies and will suit borrowers differently,” says Greg. “What one bank will do for you, another may not.” This is why it’s so important to work with a qualified, professional finance broker. They will be able to assess your capacity to get a loan as well as help set a budget for you to buy another property. “This budget is important because it will encompass both income, affordability and deposit requirements for a purchase,” says Greg.
Have your paperwork prepared
To get a loan you’ll need to provide documentation that substantiates your financial position. “Lenders make assessments based on evidence of documentation – no paperwork no loan approval,” says Greg. Having copies of the following documents ready will help speed up the process. Identification – either driver’s licence or passport. Evidence of your income, which can include payslips, group certificates, benefits statements. Bank statements that show your financial position, including bank accounts, savings accounts, existing loan and credit card statements. Historical bank statements that show money and account management.
Do your research
It’s not wise to apply for a loan without having first done some research into prospective properties. Lenders will want to know about the property you’re thinking of purchasing, including details like its location and size, what condition it is in and if it is in a high-risk area (for example, an area prone to weather or storm damage). The bank will also need to know that you’re paying a good price for it.
Get a second opinion
When you deal directly with a lender, they’ll only tell you about the products, prices and fees they have on offer. They won’t provide any direct comparison with other lenders, and they definitely won’t tell you if you can get a better deal elsewhere. This is where a finance broker can come in very handy. “A good broker can give you the info you need on multiple lenders and help you make an informed choice,” says Greg. Working with a finance broker gives you the opportunity to ensure that you get the best possible deal, and the best part is, they do all the legwork.
These loan tips will give you a better chance at loan success. They’ll also be useful for getting your loan pre-approved. “Securing your finance in advance will ensure that the loan is likely to proceed once you’ve settled on the property you’d like to buy,” says Greg. “Pre-approval gives you the confidence to negotiate on the property price that can work in your favour.”
Are you interested in adding to your property portfolio? Give Greg at Custom Financial Solutions a call on (08) 9315 9343 or email email@example.com