The Top Six Mortgage Mistakes Women Need to Avoid
We all make mistakes, sometimes it is the best way to learn. But when it comes to property investment, mistakes can be costly. By learning from others, you can modify your strategies and create a smoother experience. TRACY KEAREY highlights six mortgage mistakes that savvy investors should avoid to build a successful property portfolio.
Building a property investment portfolio can provide a steady source of income and eventually profit, when you decide to sell. However, maximising profit is a balancing act between choosing the right property, the right suburb and the right home loan.
Buying, financing and managing your investment property portfolio requires time, skill and experience. You need to do your homework, consider your current financial situation, long-term investment goals, costs and exit strategy. Success in property investing is about being prepared before jumping in.
Here's 6 mortgage mistakes you need to avoid:
Mistake #1: Purchasing based on emotion
New investors often choose a property because they have fallen in love with it. The decision to purchase an investment property should be based on affordability, market value, rate of occupancy, location, surrounding infrastructure and future growth potential. All investment decisions should be free of emotion and based on the overall potential return.
Mistake #2: Not being finance ready
The kind of property being purchased and location determines how much finance or rather the percentage of finance you can secure against a particular property. For example, lenders treat off-the-plan CBD apartments or student accommodation differently to units and homes - often restricting the amount they will lend. Before signing contracts ensure your finance is pre-approved so you are clear on the amount you can borrow for the kind of property you want to buy.
Mistake #3: Not using the right structure to borrow
Many investors are so keen to buy an investment property, they will do it at any cost and sometimes borrow using the wrong structure. For example, using cross-collateralisation on several properties in your portfolio. It can be a risky choice and depending on the total borrowings, it might prove difficult to release a security in the future should the need arise.
Mistake #4: Not engaging the right support team
One of the biggest mistakes you can make when new to the property investing game is to try and do it all yourself. The key to achieving success in property investing is to engage the right support team so you have access to research and knowledge. Organisations such as Property Women are ideal for educating and guiding you through the investing process.
Mistake #5: Not accounting for additional costs
As an investor, you need to account for extra costs like stamp duty, GST and other expenses before seeking finance. It is important to have enough cash reserves to cover mortgage repayments, council rates, maintenance, insurance, property management fees and utilities amongst other fees, should you find yourself without tenants for any length of time.
Mistake #6: Not reviewing your portfolio often enough
Banks and lenders are continually altering their interest rate offerings and there's always great deals to be found. Sticking with the same lender year in and year out could cost you thousands of dollars. So, ditch the 'set and forget' mentality and review your loans every year. If you want a free review of your current loans to find out if you have the best structure and interest rate, please give me a call.
There is no doubt that when it comes to investing in property, knowledge is power. Whether you are new to property investing or purchasing subsequent investment properties, avoiding the common mistakes made by others will ensure you build a successful property portfolio.
Author: Tracy Kearey
Managing Director and Mortgage Specialist
Home Loan Connexion Pty Ltd
Tracy is a long term guest speaker and friend to Property Women having worked with dozens of members in supporting them toward their property goals.
Tracy comes highly regarded, an award winning professional who understands finance and what loan structures will not only suit your next purchase but position your buying power so you can grow your portfolio.
You can contact Tracy directly through from the link below.