If you want to save your investment in the longer run, then investment in real estate is the best possible solution. Unlike commodities and equity that can keep on fluctuating daily, investment in the real estate business gives you a greater return than inflation, unless in the condition when an economic recession takes hold. So if you don’t have money and you are interested in investing in the real estate business, then getting a loan for property investment is the only solution.
Lenders and banks:
If you already have enough money that you can easily make investments freehold or without taking a loan, then it is not a major concern that the prices are fluctuating or not. But it comes into concern when you are planning to take a loan or self managed super fund to buy property, then there are various things to be taken into account.
Banks are one of the major sources of getting a loan to buy a property as investment loans are considered as one of the safest loans than other unsecured loans. But getting a loan from a bank is not as simple as it seems to be because the bank always takes into account the amount of margin, which is actually the loan amount to the total value of the property that you are going to channel into an investment loan. And from the last few years, due to the subprime crisis, banks stop funding one hundred per cent of the investment. It means, if the margin money is higher, it would be hard to get a loan.
While applying for a loan, there are multiple options for property lenders that have several products. You know your income and preference of your monthly payments that how much you will be able to pay, so it would be great and effortless to negotiate with the bank for a shorter tenure or a longer one. If you go for the short tenure, you will end up paying a hefty amount of amount that can be as high as 200 to 300 per cent of the principal itself. But if you go for a longer tenure, you will reduce payments and be able to ensure that you can manage the short-term repayments.
But when you decide to get a loan for property investment, banks always fund all those who can provide security, such as another property or a co-applicant who can provide the guarantee for the loan.