A Newbie’s Guide to Financing the First Investment Property

What is property financing?

Every person has that dream of owning an asset that he or she has desired for many years. However, bringing the dream to reality requires financing. Regardless of whether you are financing a home or your first car, financing your first investment property can be a difficult exercise that requires patience and proper background research. Property financing or asset financing is the process through which potential property owners seek sources of financing to help them purchase property.

Financing options for investment property are diverse and each can be appropriate to different circumstances.


What are the available options for property financing?

  • Personal savings: The most appropriate way for property financing is to start a personal savings plan. Personal savings are appropriate, as they do not make your property a liability in case you do not pay back the loans.


  • Investment property loans: Most financial institutions are willing to provide individuals willing to invest in property loans to actualize their targets. It is preferable to get an investment loan from a flexible financial institution such as these investment loan options from MOVE to finance your property as they offer flexible and affordable financing options.


  • Bridging loans: This involves taking a loan based on the property value in the market or expected to come into the market. Before you settle on a bridging loan, ensure that you consult your mortgage advisor to ensure it will be appropriate.


  • Use of Equity Release: This form of financing is available for citizens in the mid-50s and above. An equity release will allow for financing of your property without selling it to them.


Why do you need to know about property financing?

Access to proper property financing comes with many advantages for those investing in property. The following tips can help you increase your chances of successfully financing your property:


  • Consider making a sizeable down payment: Financial institutions are hesitant to help their clients in property financing. If you are able to provide a huge initial down payment, however, the chances of your application being successful will increase and you will get affordable investment property financing rates. If you cannot afford a huge down payment, you should try a second mortgage for your property.


  • Create a good credit score: Most financial institutions will rely on your credit score to approve or disapprove your loan application. You should ensure that you become a strong borrower and improve your credit score.


  • You should consider seeking financing from small financial institutions: People seeking loans are always on the rise and you can be sure a majority of them will go to well established financial institutions. You should seek financing from small banks in your neighborhood since they are flexible and will offer you favorable interest rates.


  • Involve a property appraisal expert: Financial institutions can provide misleading information since they focus majorly on a deal that is beneficial to them. A professional property appraisal expert will help you to ensure that the financial institution does not provide you with a loan that equals your property value.


What are the characteristics of a good investment loan?

When applying for an investment loan, you should consider issues that affect your ability to make timely repayments. The best type of loan for investment property should give you:


  • Access to financing 24/7: It is important to acknowledge that most people seeking to invest in property would like to have access to financing immediately they a need arises. A financial institution that will guarantee you that their financial services are available to you in a 24/7 basis uninterrupted should be a priority.


  • Affordable interest rates: The limitation that comes with seeking financing for property is the high rates charged by financial institutions and you should seek a financial institution that eliminates this. The best financiers will give you access to affordable interest rates on the loans you take.


  • Friendly customer care services: Financial institutions with good customer care services provided by professionals should be a priority. A financial institution should be willing to engage you on all issues that concern you.


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