Investing in a home to either rent out to tourists or fix up and flip for a profit might be a terrific way to make additional money. If you’re unable to make the entire payment for a property, you might be able to finance it using an investment property loan in Abbotsford.
A loan for investment property is a type of mortgage used to buy a property that would yield income. It is usually utilized to either buy a property to rent out or buy and refurbish it with the intention of selling it for a profit is known as “house flipping.”
If the plan is to buy a multifamily investment property to live in one unit and rent out the others, a standard loan program would be a better fit.
Requirements For Obtaining an Investment Property Loan
Since loans for investment properties are seen as riskier than those for permanent residences, applicants must show a higher level of financial stability. Here are a few standard prerequisites to meet:
- Down payment: The majority of lenders want applicants to put down at least 20 percent on investment property loans, although some residential property loans only require 3.5 percent down. Also, the applicant must be the sole owner of the funds.
- Mortgage reserves: Documentation showing a borrower has enough cash on hand to cover two to six months’ worth of mortgage payments is required by lenders. The exact funds allowed will vary based on how many properties the borrower owns.
- Credit score: To be eligible for loans for investment properties, borrowers must have a credit score of at least 640. However, a credit score of at least 700 might be necessary for people buying multifamily residences.
- Property management history: Borrowers may be required to provide documentation of their prior rental experience for specific lending programs. In order to demonstrate that they have previously managed rental properties, some lenders could even ask borrowers to submit tax records.
Process Of Obtaining An Investment Property Loan
The process of obtaining an investment property loan is somewhat more complicated than a standard residential mortgage. Here is a brief overview of what it entails.
- Finding The Right Investment Property Mortgage Lender
- Filling Out a Loan Application and Supplying Documentation Of Assets
- Obtaining An Appraisal
- Reviewing The Closing Disclosure
- Closing The Deal
Rely On Sandhu & Sran Mortgages For Investment Property Loan
Looking for a reliable investment property mortgage broker in Abbotsford? If yes, your search ends here at Sandhu & Sran Mortgages. We are a leading mortgage firm, assisting potential property buyers in securing a competitive loan deal at the lowest interest rate possible. Discuss your investment property buying needs to get started with your loan application. For more details, give us a call today.