5 Tips For Property Investors Before Applying or Renewing A Loan

Investment loan

If you’re looking to buy an investment property or you have a property investment loan expiring soon, then you will want to read on.

At the moment lenders are mainly focusing on your serviceability rather than your equity position. Here are 5 tips before applying for a loan.

1. Check your credit history. It’s free to check once a year and it will show your monthly repayment history. If there are any issues with your history then you will need to explain on your application the reason for late/overdue payments. It’s better to address any issues upfront than to have a lender refuse your application without any explanation.

2. Don’t apply for too many other types of personal loans in the 12 months prior to applying for an investment loan. All loans will be taken into account with your application and your serviceability will be affected, so it’s better to hold off on those personal loans until after your loan has settled.

3. Review your current expenses. You will be required to provide copies of all your bank accounts and credit cards statements for at least the last 3 months prior to your application. The lender will be assessing your expenses and also your ability to save. Therefore you should be reviewing all your expenses 6 to 12 months prior to applying for a loan and reducing or eliminating any unnecessary expenses. You should also have a separate saving account and be mindful of what you label each transfer between accounts.

4. Lower your credit card limits. It doesn’t matter whether you pay off the full balance of your credit card at the end of the month, your application will be reviewed on servicing the full amount of the credit card limit you have. Potentially the lender could be factoring in that your servicing ability is reduced by about $150 per month for every $5,000 of credit card limit.

5. If you’re self employed then you will be required to provide at least 2 years of company financials and personal tax returns. The lender will be looking at how your business has performed over the last 2 years and that you know what you’re doing.


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