Tag Archives: mortgages

Getting Finance for Your Investment Property

mortgage_finance_investment

Unless you already have significant wealth, it is almost certain that you will need to take out a loan/mortgage in order to buy an investment property.  Most people agree that being in too much debt is not a good thing, however if you are borrowing to purchase an appreciating asset (such as a house) then the borrowing can help propel you to increased wealth.

Applying for an Investment Mortgage

Getting Finance for Investment

To be honest, the property investment mortgage market is tight right now. It’s not that there isn’t cash available for loans it is just that banks and other financial institutions are making homebuyers with AAA credit ratings jump through hoops to get financing for investment properties.

One of the keys to property investment right now is the ability to pay back the mortgage. That is why banks are requiring many people with excellent credit to prove they can make their monthly loan payments.

Use Interest Only or Pricinpal and Interest on Your Investment Loan?

Interest Only or Principal and Interest

For the smart investor, an interest-only home loan has several advantages over the more standard principal and interest home loan. Those advantages include:

  • Lower monthly payments
  • More available cash
  • The ability to use the extra cash for further investment

With a standard principal and interest property financed loan, you pay a certain amount of the loan as interest every month while also paying down some of the principal (also known as the balance).

With an interest-only investment mortgage, the payment you make every month only covers interest, freeing the part that would cover the principal for further investment…