How to get a loan to buy an investment property?

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Hugo
Posts: 54
Joined: Fri Jul 19, 2013 2:35 am

How to get a loan to buy an investment property?

Post by Hugo »

Hi! I am thinking about buying a property as an investment. I will need a loan to complete the purchase. I work as an administrative officer and I earn about $60,000 a year. I have seen a few of my friends benefiting from property investments and I too would like to take advantage of the currently growing property market. But I am not sure if will qualify for a loan. Can you anyone tell me how banks usually assesses a loan application for the purpose of buying an investment property? And how can I qualify for a loan?

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Otto Dargan
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Re: How to get a loan to buy an investment property?

Post by Otto Dargan »

Hi and welcome to the forums Hugo,

You can apply for an investment loan to buy a property for investment purpose. Lenders usually have stricter approval criteria when giving out loans for such purpose. This is because investment loans tend to be of a higher risk than standard home loans.

To qualify for such loan, you would need to be in a strong financial position and meet the following criteria:
  • Genuine savings: You should have 5% to 10% in genuine savings.
  • Equity: If you are borrowing more than 90% then some lenders like to see equity in other properties (i.e. this should not be your first investment property).
  • Credit history: You should have a good credit history.
  • Credit score: Your [url=https://www.homeloanexperts.com.au/cred ... oan/credit score[/url] should above average.
  • Employment: You should have a stable employment. You may be required to be in your current job for at least six months.
Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Hugo
Posts: 54
Joined: Fri Jul 19, 2013 2:35 am

Re: How to get a loan to buy an investment property?

Post by Hugo »

What do you mean by credit score and where do we check it?

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Otto Dargan
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Re: How to get a loan to buy an investment property?

Post by Otto Dargan »

Hi Hugo,

A credit score is an automated assessment of how risky your loan application is to a potential lender. The information from your loan application and credit file is used to calculate the credit score. Your application may get declined if you are unable to meet the lenders minimum score for approval.

Some of the common causes for a low credit score may include:
  • Bad credit history.
  • Lack of genuine savings.
  • Missed or late payments.
  • Instability of address or employment.
In most cases there may be two or three aspects of your application which are causing you to have a low score. You can improve your score and apply for a loan again if you are able to correct these problems.

You can check your credit score and see if it is high or low by using the Credit Score Calculator. This calculator uses method similar to the ones used by the banks and other lenders.

However, please note that the result is based on estimates and therefore, it should only be used as a guide.

If you would like to know more about these then you can check out our website. We can also be reached on 1300 889 743 or you can fill in our free assessment form to see if you qualify for a loan or not.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Hugo
Posts: 54
Joined: Fri Jul 19, 2013 2:35 am

Re: How to get a loan to buy an investment property?

Post by Hugo »

Thanks for letting me know about the calculator. I will give it a try and call you to discuss my score and chances of qualifying for an investment loan. Bye for now! :)

Madame Butterfly
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Joined: Wed Jul 03, 2013 2:18 pm

Re: How to get a loan to buy an investment property?

Post by Madame Butterfly »

Hi there, like Hugo, I too want to buy a property for investment purpose. You mentioned that we need to have 5% to 10% in genuine savings to qualify for an investment loan. Can you tell me what exactly you mean by genuine savings?

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Otto Dargan
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Re: How to get a loan to buy an investment property?

Post by Otto Dargan »

Hi Madame Butterfly,

The money that you have held in your savings account for a certain period is considered as genuine savings by most lenders. generally, the following may be accept as genuine savings:
  • Money that you have saved in your bank account over the last three months.
  • Money held in a term deposit for over three months.
  • Equity in an existing property (accepted by only some lenders).
  • Shares or managed funds held for three months.
  • Proceeds from the sale of a property (accepted by only some lenders).
In some cases, lenders may ask you to hold the funds for a total of six months to prove that you are able to refrain from spending the money.
While other lenders may require your savings to increase over time.

Unless you make some savings of your own, these lenders may not approve your loan. This is to make sure that people do not try to use a gifted deposit as genuine savings. If you are currently renting then some lenders may consider the rent you have paid in the last twelve months as genuine savings.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Madame Butterfly
Posts: 35
Joined: Wed Jul 03, 2013 2:18 pm

Re: How to get a loan to buy an investment property?

Post by Madame Butterfly »

Oh I see. I didn’t know money we have in our bank were so closed assessed. Thanks for sharing this info with me. See ya!

gccseo1
Posts: 2
Joined: Tue Feb 10, 2015 7:07 pm

Re: How to get a loan to buy an investment property?

Post by gccseo1 »

In these days, Many companies are offering the financial services at various interest rates. Before we can take money for buying from any financial services, we must go, through certain factors and mainly on interest rates because of that only we can take money. Recently, My friend had experience regarding on this at one of the companies at good interest rates.

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