Article provided by Big Property
I’ve always said that the most important aspect of building a property investment portfolio is finance.
Get the financing right and everything else will fall into place or, to put it another way, it doesn’t matter how much of a bargain or great investment is on offer, without money you simply can’t play.
Finding the right finance deal is not as simple as calling the nearest bank and expecting them to write a cheque. In fact, finding the right finance deal is not dissimilar to negotiating a maze. There are lots of dead ends and false turns and the best person to get you through is someone who has steered a course through the maze more times than they can remember because there is no substitute for experience.
It amazes me how many people do take the obvious path of simply leaving it up to their bank to find them the right deal. That trusting approach merely means the bank has been given permission to structure a deal that is best for them – not you!
What people who are not in the industry don’t know is that every lending institution has a set of priorities and those priorities differ from lender to lender. Some lenders are comfortable with first home buyers but not investors while others might give priority to investors but are uncomfortable with shared property ownership.
Understand this, if you go first to a bank that bank is going to assess you against its lending criteria and judge your suitability for one of its products and if you are deemed to be not a good fit for one of the bank’s products it could have delayed your investment strategy by up to half a year.
No, my very strong advice to any property buyer is to go, in the first instance, to an independent mortgage broker who can assess your very particular needs before marrying you to the right lender. The right mortgage broker is not beholden to any lending institution and knows (or should know) the priorities of each and every lender and after a brief conversation with you should be able to identify at least a couple of potential lenders that would welcome you into the fold.
Also, it is dangerous to make an assessment of a lender based solely on the advertised interest rate. Make sure your broker explains the difference between the advertised rate and what is called the comparison rate, which is a truer indication of what you will be paying, but most important of all, any broker worth their salt will do a risk assessment so that any loan that is arranged on your behalf is structured so that it will not cripple you. Trust me when I say you do not want a loan you can’t afford to repay and sometimes the best financial advice you can get is to forgo an opportunity because the numbers just don’t stack up in your favour.
At BIG Property Investments we’ve formed a strategic alliance with Century21 Home Loans so when it comes to mortgage brokering and arranging the best possible finance deal for our investors, we’ve got years and years of experience and thousands of deals that have gone before to pave the way for you to get a smooth ride!
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.
Director - BIG Property Investments
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