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Monday, February 19 2018

If you have concluded that you will have an investment shortfall by the time you retire and that you are going to use property to help bridge that gap. Then your next critical step is to confirm you can get the money to buy an investment property.

There is little point researching property, investigating various suburbs and going to open homes if you don’t know what your purchasing capacity is.

Knowing exactly what your purchasing capacity is going to make it much clearer where you can afford to look and start to narrow down your options.

Which means you will need an understanding of what you can borrow. This might seem obvious but you would be surprised how many people skip this step.

In the current lending environment it would be a mistake to assume you will qualify. In recent times lenders have made some fairly significant changes to lending policy which has had a negative impact on peolpes 

The key factors that will influence your ability to borrow for property are going to be:

  • your current income and expenses – which will determine how much debt you can service, and
  • Your available borrowable equity in property you own and/or deposit funds you have available. Borrowable equity is not the same as the total equity in your home. It is only the amount a lender will allow you to access. This amount will be lower than your total equity.

Importantly it is not sufficient to just have a good surplus income or good equity in your home. You need to tick both boxes to qualify for further lending.

It is essential that you have your borrowing capacity properly assessed by an experienced professional before you go looking for property and certainly before you put a contract on a properly.

By properly assessed I mean a full review of your paperwork – payslips, saving statements, loan statements etc. Using online calculators on lender websites or just handing over some brief details over the phone to a lender is highly unreliable.

If you were pre-approved 3 or more months ago don’t assume that you still have finance. Lenders policies change regularly and have changed significantly in the last 12 months. Also, your circumstances may have changed which may now impact your borrowing capacity.

Need to arrange a finance assessment?

Book in for a FREE telephone appointment with me to arrange a review. Book your FREE appointment now.

I look forward to talking with you

Greg Carroll
07 3849 9822
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Posted by: Greg Carroll AT 11:10 pm   |  Permalink   |  Email