The property market is gaining more and more wealth to many investors globally. Some of the reasons why people invest in property is for the purpose of wealth creation, growth of capital, tax benefits and as a retirement plan. The goals for property investment could be either long term such as funding retirement plan or short term such as on a housing boom. It is advisable for investors to consider a long term investment with a view of 7 to 10 years if planning to buy and hold the property.
One factor that is always a major concern as long as investment in property is concerned is finance. This is because the number of properties that can be bought is dependent on financial capability of an investor. If an investor does not get their finances right, then the borrowing ability may be restricted in a bid to creating a bigger property portfolio. Those who are rich get even richer due to a better financial access. The following financial tips are essential for property investors.
The first financial investment property advice is reducing credit card limits and canceling any unused credit cards. Reduction of the credit card limit can have an influence on the amount of money that can be borrowed for property. If there are credit cards that are not being used, it is important to cancel them since lenders usually consider credit cards when making calculations on how much one can borrow regardless of whether the cards are being used or not.
Investors should consider consolidating their personal debts or loans with a higher interest rates since they do not only cost more on interest but will also have an effect on the borrowing capacity of the investors.
Another great tip is considering using different lenders. Most people consider suing the same lender for a long period of time due to convenience and loyalty. However, this reduces the amount that an investor can borrow. It also increases the risk levels since only one lender funding the whole investment portfolios can result in them assessing the investment collectively rather than individually. Use of different lenders increases the chances of landing on the best deals, increasing the borrowing capacity and having total control over the property.
An investor should always avoid providing their lenders with more than one property as security, often referred to as cross collateralizing security. This often results to problem when some of the properties’ value increase and there is need to release some of the equity newly created. The single lender has all the properties tied up and if an investor seeks to find a different lender with a better deal, the old lender may not be willing to discharge the mortgage partially.
Investors should carry out a regular review of their securities as giving the lenders too much security can greatly restrict or reduce the investment potential. One should have proper loan structures right from the start. A loan portfolio that is poorly structure reduces an investor’s flexibility. Only experienced buyers agent in Sydney Inner West or mortgage who specialize in home loan investments should be used.