The residential investment market is very strong right now. There is a shortage of available, affordable homes in many areas, so buyers are queuing up to purchase cheaper properties and often paying over the odds to seal the deal.
If you are a first time buyer, it is a tough old world out there. Lenders were badly burned in the global economic recession and the days of rampant sub-prime lending are long gone. These days, if you don’t have a large deposit and a pristine credit history, you can expect to be living in rented accommodation for the foreseeable. However, if you are interested in making money from investing in property, it is definitely a buyer’s market.
It is not only first time buyers who are in a corner with regards to home financing options. Loans for property investors are not easy to find, with many lenders tightening their belts and lending criteria. However, if you are willing to be creative and can think outside the box, you should have no problem finding suitable funding to secure your next investment property.
Check Your Credit History | The options available to you will be far greater if you have an excellent credit history. Lenders won’t exactly be falling over themselves to offer you money, but they won’t be shutting the door in your face either.
Always check your credit score before you start looking for a lender. Any mistake on your credit record, no matter how minor, could make the difference between a low interest rate and a sky-high one. Lenders will also look at your spending habits and whether you have enough cash in the bank to cover unexpected expenses.
Borrowers with a poor credit history will need to look at other avenues of lending. For short-term financing, a bridging loan might be enough to fund the purchase until you sell the property on or you secure finance from elsewhere. Look at hard money lenders Virginia – firms such as Washington Capital Partners offer this type of financing.
Have a Large Deposit | You will need a deposit of at least 20% of the property purchase price if you are applying for a mortgage, but the bigger the down payment, the better, as this will save you interest on the borrowing.
Other Borrowing Options | One way to raise finance is to borrow against the equity in another property. This way you won’t need to have money in the bank. For short-term financing with a good credit history, you should also consider taking out a secured loan or borrowing on a high limit credit card. As long as you don’t borrow money for too long the interest repayment will not be too high.
Successful property investors will find it easier to raise finance, as they have a history of successful property transactions. However, it is possible for a new property investor to secure funding as long as they approach the right lenders, so don’t give up if you have found the perfect investment property. Talk to a specialist broker and see what your options are.
Like what you see? Get it first with a subscription to ASPIRE Metro Magazine.