If you want access to more cash for your next investment property purchase, there's one person you need to speak to.
Blogger: Helen Collier-Kogtevs, Real Wealth Australia
Getting a property loan involves much more than simply making an application with a lender and crossing your fingers.
And most investors don’t realise that there’s actually a huge difference between using a broker and going straight to your bank or lender.
When it comes to finance approval, every lender uses different policies, so each one will treat your application differently.
With an experienced mortgage broker on your side, your loan application can be tailored and presented to help it best meet the criteria for the lender you are applying through.
For instance, every lender applies an interest rate ‘buffer’ to the current lending rate when assessing your application.
This is known as an ‘assessment rate’ and is the figure that banks use to ‘stress test’ your mortgage.
If Bank A’s current variable interest rate is 6 per cent, then their assessment rate might be 8 per cent.
However, Bank B might have an interest rate of 6 per cent and an assessment rate of 7.5 per cent.
It’s only a difference of 0.5 per cent, but that could impact your borrowing power by up to tens of thousands of dollars.
Let’s say you’ve found the property you want and you need to borrow $400,000.
Bank A might assess your borrowing capacity at $390,000, while Bank B’s lower assessment rate might mean you’re approved at $410,000.
As you can see, the variance between each bank’s internal procedures could have a huge impact on your borrowing power.
It could actually be the difference between you getting the loan you need, or being denied for finance.
When you ‘master the money’ in property investing you become an ‘unstoppable force’, buying property after property.
But if you don’t – you’ll likely hit a ‘financial brick wall’ and won’t achieve your financial goals.