What are the basics to snagging an investment property?

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dwilson

162 posts

Master Geek

#214671 23-May-2017 13:15

We bought a house a while a go, it was in a rough state so we've been renovating and improving. So far we've added about 30% value to the property. We figure we have equity spare and might grab another. Do we just get a valuation on the current property and head back to the bank to get pre-approval for another one?

Geektastic

17935 posts

Uber Geek

Trusted

Lifetime subscriber

#1786657 23-May-2017 13:20

Pretty sure that will depend on your bank.

We recently increased our mortgage to cover the costs of a sub-division, the receipt of which will then reduce the mortgage by at least 45% and the bank treated it as if we were making a whole new mortgage application - it was a royal PITA.

Not sure whether they would do that with an investment property or not these days.

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scuwp

3880 posts

Uber Geek

#1786709 23-May-2017 13:26

Basically yes you are correct. A bank will look at your equity holdings and income and decide what sort of money they will make available. All have their own algorithm as to what they will and won't lend on depending on the current situation.

Lazy is such an ugly word, I prefer to call it selective participation

eph

187 posts

Master Geek

#1786711 23-May-2017 13:29

I agree. I'd talk to the bank (or preferably good broker) first before spending any money on proper valuation (you can use the much cheaper ones online just to get indication).

Don't forget that you need 40% equity for investment property so your 30% added value might not be enough. You also need to be able to service the new mortgage.

Banks are also tighter with money these days so might be harder to get loan than few months ago.