In this ever-changing world, brick and mortar is still one of the safer investment options. The world may be undergoing a fast transformation thanks to the rise in technology, but one thing remains, the success of property investment.
However, the biggest question on most interested first time buyers lips is, how do I invest or more so how do I prepare for a mortgage? Here are some tips that may help you in the preparation of a mortgage that ensure investment success.
1. Get organised
It is important to see where your finances currently stand. You will want to pay off as much debt as possible so that they don’t weigh you down during the purchase process. Looking at your credit reports and credit scores will allow you to gauge what ballpark figure you’ll be able to afford on a mortgage.
Next, collect all your financial information, this will be needed to fill out mortgage applications. Make note of all your current loans and the relevant providers, as well as all ongoing monthly payments. On the other hand, making a list of all your assets will help you understand your financial situation.
2. Create a budget
It will be wise to establish how much money you are willing to invest in a property. Your budget is influenced by many factors, such as household income, net expenses and savings.
Once you have established a net monthly income you can assess the difference between how much you can afford versus how much you want to spend. From here you can plan accordingly, and adjust if need be. If you don’t have enough extra money to reach the goals you have set you may need to reduce your expenses, increase your income, or adjust your goal.
3. Begin the search
Once you have a broad idea of how much you want to spend, you can start looking at properties in your price range. There are many property websites out there that make the search so much, so you can filter in your requirements. Some good websites include, Rightmove, and Zoopla. Look at property trends in the area of your interest to see what houses are selling for.
4. Secure a downpayment
An essential part in buying a property is the downpayment. Investment properties tend to require a higher down payment of an average of 20% the purchase price. This is because mortgage insurance is not applicable for investment properties in most cases.
It’s important to know that the more money you put down for the property, the lower the loan you will need to take out. Keep in mind additional costs that come with purchasing property, such as closing costs, and budget accordingly. Online mortgage calculators are a great help as they help project expected monthly costs and payoff dates.
5. The mortgage
Just as you need to shop around for the perfect property, you need to shop around for the right mortgage plan. There are a large number of options available when it comes to mortgage options. Different investment loan options come with different benefits. Carefully compare rates and fees as well as which financial institution you feel will give the best cooperation and that you can trust.