Lender reveals biggest investor mistakes

By |

Property investors typically make a lot of mistakes when financing their portfolios, according to lending adviser Dalia Barsoum, who points out four critical errors that investors make: 

1: Not getting pre-approved

Being pre-approved gives you a general idea of how much you can afford to borrow. It means that the lender has verified your information and credit rating and agreed to provide you with a specific amount of money. Investors are in a much better position to go house hunting when knowing how much they can afford and have financing for. 

2: Too much emphasis on interest rates

While lowering the costs associated with financing is crucial, a lower interest rate alone does not always equate to the best loan. For example: a lender offering you 6% interest and 35 years amortisation will put in your pocket thousands in annual cash flow relative to another lender offering you a lower interest rate of 5% and shorter amortisation of 20 years.

Investors should also consider other aspects of the loan such as additional fees associated with commissions and penalties as well as the attractiveness of the loan terms.

3: Not analysing the property enough 

Investors who purchase property without factoring in proper reserves for maintenance, capital improvements and vacancies are usually setting themselves up for trouble down the line. The same is true for investors who purchase after overestimating the rental income.

4: Lack of planning

Why you are investing in real estate? How much cash flow do you expect on a monthly basis? How many properties do you need to get you where you want to be?

If you fail to think such questions through you could be tempted to buy anything and everything, only to realise at the end that you are somewhere where you did not intend to be.

Upfront planning and an ongoing review of your plan will help you stay focused, save you money and increase your chances of success.

Would refinancing help you?

With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

Top Suburbs : canterbury , wallsend , coorparoo , st kilda west , hebersham

go back

Get help financing your investment

Do you need help finding the right loan for your investment?

When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.

Just fill in a few details below and we'll then arrange for a local expert Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus, our mortgage broking service is at no cost to you.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here