If you’re a first-time investor you may be worried about funding your investment, which is perfectly normal. After all, any investment comes with some sort of risk. To help you avoid financial difficulties, you should consider the following tips which will allow you to secure your desired property and fund any other outgoings related to your investment.
If you’re lucky enough to have collated significant savings, you should definitely use this when purchasing a property. You may only have enough to pay off the deposit, or your savings could cover the entire purchase price – whatever your financial position, using your own money allows you to begin your investment at an advantage.
While using your own money can limit your budget, it is still known as one of the best finance methods, as it means you do not have to worry about paying back any debts to lenders or even friends and family. It will also mean that the property is owned by you alone, so you can make any changes you wish. If you have enough of your own funds and are in search of a profitable investment, you should take a look at the developments available at RW Invest. Their luxury apartments offer high rental yields in prime locations, which will allow you to generate lucrative returns from your initial savings.
If you do not have enough capital to pay for your entire investment, you should consider getting a conventional bank loan. You might need this for the full purchase, a down payment, or just for property maintenance funds. Whatever the reason, a bank loan could help with any financial setbacks, so you should shop around to see where the best deals are, which usually offer low-interest rates.
To be approved for a bank loan, you will need to have a personal credit score of 660 or higher, and your credit history will be checked to see if you are a reliable debtor. Your current income and assets will also be assessed, as will your ability to pay off your current mortgage or other bills because more than likely, you will not be approved if you’re in arrears.
If you’re looking to let out your property and already have a mortgage, you may want to take out a buy-to-let mortgage. This is similar to your home mortgage, however, it is only used by landlords who plan to rent out their properties. There is also a significant increase in fees, such as interest rates and down payments, although these are expected due to the nature of the investment.
Mortgage lenders will look for several things when approving applications. This includes income, as you must be earning over £25,000 a year, and they will also look into your credit rating. Your age will also be a contributing factor for approval, as many lenders place a limit for the mortgage end date, so you should be no older than 75 when it finishes. The lender will also determine the amount you can borrow by calculating your expected rental income, which would need to be 25-30% higher than the mortgage payment. This is for their benefit to guarantee payment, as well as yours as the higher the rental income the more profits you will receive.