The first step to making a successful property investment: Securing financing

Julie Brownlee, Fsp Invest, 29 Oct. 2014

Tags: property, investing in property, financing for investing in property, property financing, property investment, invest in property



If you want to invest in property, unless you have a lot of cash at your disposal, you’re going to need to secure financing from the bank.

So how can you ensure your bank will look on you favourably and give you the finance you need to invest in property?

Let’s take a closer look…



Securing the financing you need from the bank to invest in property


Making yourself a favourable candidate for financing from your bank is essential for investing in property.

The good news is, there are steps you can take now to increase your chances of securing this finance in the near future.

Banks tend to check three main things when deciding whether to give you financing for property…


#1: Can you afford the loan to buy the property?


One of the first things your bank will check is if you can afford the repayments on the loan. Banks tend to ignore the possible rental income your property will generate, so you need to have enough money coming in to comfortably afford the bond repayments.

If your bank doesn’t think you have enough money coming in, the best thing to do is start saving up a larger deposit so the loan amount will be smaller.


#2: To secure financing for your property, you need a good credit record


Issues with your credit record can lead to your bank refusing your application. For instance, if your credit record details any bad credit, your bank won’t like the look of this.

If you don’t have a credit record, the bank may also refuse your application. Banks want to see that you’re capable of managing your debt and repaying it.


#3: Your source of income is important when investing in property


If you’re self-employed, securing financing can be more difficult.

If you’re self-employed, you bank will ask for six-months of bank statements to look at your income.

So you need to ensure that you’re paying yourself a regular salary and this reflects in your bank account.

If you’re self-employed, your bank may ask for a larger deposit so you can secure financing.

If you meet these three things, chances are the bank will give you financing for investing in property.

So there you have it. Why securing financing is the first step to making a successful property investment.

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