When you have a bit of savings accumulated, purchasing real estate property as an investment is always a great idea. However, it is essential to understand that adequate attention needs to be given to all the elements and factors affecting the rate at which you can secure an investment property mortgage.
Generally, mortgage insurance doesn’t cover investment properties due to which you are required to make a minimum down payment of at least twenty percent. If you are an avid property investor or if you are a first-time property investor with the required knowledge, you understand the importance of a large down payment.
The mortgage agent will try to find out if you are financially stable and secure your loan based on your current ability to repay the loan. The lender will not be very interested in your future earnings as that is always uncertain. The lender needs to be sure that you won’t concentrate only on your home mortgage and let the investment property mortgage default in the event of a financial dip.
Why invest in property?
The main reasons behind purchasing property can be rental income, future re-sale of the property at a profit, or property development. As the main intention of investing in a piece of property is to gain a return on investment, you will constantly need to make sure that your property is well kept and taken care of, even in the periods of un-occupancy. It is therefore in your best interest to find the right tenants that have a record of consistent payment of rentals and decent behavior.
Investment in property is made for either a short or long period of time depending on the type of investor you are. It also depends on the type of property you are interested in. A professional real estate financing firm will help you decide how to use the property in a way to maximize profits.
Securing the best possible investment property mortgage rate
There are ways to ensure securing a favorable mortgage rate while investing in a property to earn a return:
Keeping your non-mortgage debts to a minimum, thereby ensuring a lower debt to income ratio. This helps lenders view you as a promising borrower.
Having a good credit score allows you to be seen as a qualifier for better mortgage rates for an investment property.
Putting down a higher down payment (around twenty-five to thirty percent or more) will automatically convince the lender into providing you with the best mortgage rates available.
Don’t let the stress of acquiring a mortgage for investment property deter you from making a sound investment decision.