Making Sure Your Professionals Are Working For You – Part 2

Making Sure Your Professionals Are Working For You – Part 2
09-May-2019

 

This article is a follow on from last month’s discussion about why it is crucial to ensure your solicitor or mortgage broker work for you 100% in any property investment dealings.

As mentioned in the previous article, we often see many amazing deals fall over due to solicitors’ lack of property investment knowledge but that aside, another one of the biggest reasons of property transactions failing to go unconditional is finance issues.

In this article I want to discuss the issue of financing your property investment and how you can avoid the pitfalls.

Not Enough Equity Or Cashflow

The most common financial hurdle is that you may not actually have enough equity or cash flow to service debt required for this property purchase. Don’t make the mistake of just assuming that everything will be fine - see your bank or mortgage broker to ensure you are well informed before you waste your time and other peoples.

If you are determined to get in the property market as soon as possible and you have established that you don’t have enough funds, look for a strategy that will suit your current financial position. This could include things like saving up for a specified period of time, paying off existing debt, maybe approaching the ‘Bank of Mum and Dad” as an option or finding another way of sourcing external funds.

Keep in mind there is no point wasting your time looking for properties unless you have your finances sorted and are ready to buy. When you have pre-approvals, budgets and realistic figures in mind you are in a much stronger position to negotiate well.

Bank Or Broker

I personally hold a strong opinion about having a good mortgage broker on your side. However, if you have a fantastic relationship with a bank/banker and are a one strategy type of person, then I suggest keep talking to your bank.

If you are planning on buying multiple properties in the future however, you should be aware of some trigger points (one bank trap) of why you really need to use more than just one bank – this has nothing to do with loyalty, but rather protecting what you own. More on this one at a later date.

What I love about a good mortgage broker is that by helping you and getting to know you, they will most likely become a key person in your ‘Team of Experts’. Hurdles you may face when dealing with banks can be side-stepped or overcome when dealing with professional mortgage brokers.

For example; everyone’s financial situation is so different when they look at buying a property. You might be married, single, with children, receive or pay child support, own 5 properties in 5 banks, own 5 properties in one bank, a government employee, self-employed, 1 grownup child, 6 children at home under 10 years of age and the list goes on… some banks will take you with open arms and others won’t want anything to do with you.

A mortgage broker’s industry knowledge enables them to identify the most suitable option for you, and they can also source lending through non-bank organisations. Do you know what bank is best for a particular situation? Heck no! However, your mortgage broker does.

The Benefits Of Specialist Mortgage Brokers

Like any profession, not every mortgage broker is going to be equal. It is important to find one that is an expert in property investment and understands what you are trying to achieve. It is a good idea to ask around particularly if you know any experienced property investors or buyers and find out who they use.

A specialist mortgage broker understands property investment in and out and the type of investment you are buying into. You need someone who is quick with the process and will be on your back getting anything needed from you on time to complete the paperwork on time.

Finance is slow to get approved, so the quicker you and your broker get onto it; the more chance there is of getting your finance approved. Make sure your broker is on your Team of Experts.

Looking to buy or sell your property? The sales team at Property Ventures have extensive experience and a clear understanding of property investment in New Zealand. Give us a call today!