Congratulations, you’ve made the exciting decision to purchase an investment property and now it’s time to apply for a loan to help finance it. It’s best to be as organised as possible when applying for a loan to help make the process more streamlined. Here are a few top tips to help you get started.
1. Research, research, and more research
Before you even think about putting in a loan application, you should do your research on the various loan options available. Consider how you intend to repay the loan, the fees involved, your buying situation, and the type of loan that is best suited to your needs. If it’s your first time applying for an investment loan, understanding your loan options could be quite confusing. There are principal and interest loans and interest only loans, and then it’s whether you opt for a fixed, variable or split rate. If you are wondering what options are right for you, speak with one of our friendly lending experts who will be happy to guide you through your different options.
2. Figure out how much you can borrow
Before you begin searching the perfect property, it’s wise to understand how much you can potentially borrow. Tools like home loan calculators can help you determine this. You will need to provide amounts for any income you receive before tax and your expenses, as well as whether you have any dependents, your preferred loan term and whether the application would be in single or joint names. The home loan calculator will then give you an indicative estimate of what you could borrow up to.
3. Understand your repayments
Once you know how much you might be able to borrow you should estimate how much your monthly repayments might be using a repayment calculator. This handy tool can help you to calculate the repayments on various loan amounts, making it easier for you to figure out which is the right home loan to suit your circumstances. You can also use it to determine how you could pay your loan off faster with extra monthly repayments.
4. Save a deposit
Before you apply for a home loan you’ll need a deposit, this is usually around 5-20% of the property value. Once you have figured out how much you could borrow this will determine the amount of deposit you might need to save for. Set yourself a budget, cut back on daily splurges and open a high interest earning savings account to help you reach your goals sooner.
5. Get your documents in order
Once you have your deposit ready and have decided on the right loan for you, you’re ready to submit your home loan application, but first make sure you have all your documents organised. Applying for a loan can be a time-consuming and frustrating process if you are missing documents when submitting your application. So get ahead of the game and keep a file with all the right documents in it. Some of the common things most lenders will ask for include proof of your income, bank statements, ID, and potentially tax returns if you are self-employed.
6. Speak to a home loan specialist
Speak with a home loan specialist who can answer any questions and offer guidance. With rates and home loans changing constantly it’s important to know that you’re getting the latest home loan information. Enquire today and one of our friendly lending experts will be happy to guide you through your home loan application.