Introduction
A healthy credit score can be invaluable for property investors. If you have good credit, you’ll be able to secure better interest rates and lower fees when applying for or securing your next investment property. In this blog we will look at how a high credit score can save you money and get you more deals!
The interest rate you pay on your mortgage
Interest rates on mortgages are calculated on a variety of factors, but also look to your credit score. If you have a good credit score, you’ll likely pay a lower interest rate than someone with a poor one. If you want to know what interest rate will be charged to your mortgage, it is best to get quotes from different lenders so that you can compare rates and find out which ones are most affordable for your situation.
The amount of deposit and other fees you will be paying
Deposits are the amounts of money that you will have to put down in order to secure each property. Typically, deposits are around 25% of the property purchase price for investors looking to scale to 5+ properties using bank lending.
The source of deposit funds will have to be declared on your application. Dubious sources of funds are a compliance and money laundering red-flag – meaning that lenders may decline your loan application based on this factor alone.
Applying for credit
Credit score is one of the main factors that lenders use to decide whether or not to approve your loan application. A bad credit score can make it difficult to borrow money and may even prevent you from buying a property. You should check your credit report regularly and make sure there are no errors on it. If there are any, you can dispute them with the reporting agency (there’s usually a contact number on the report).
You should also check your credit report before applying for any loans or credit cards, as this will help determine whether you’re likely to be approved.
Securing deals with a high credit score
You can secure a better deal with a high credit score. You can also get a better interest rate and loan amount, but the first thing you’ll notice is that you can get pre-approved for more lending.
When you apply for an investment property loan, one of your main concerns should be whether or not you will be able to get approved. If you don’t have great credit, then this may be an issue because some lenders won’t even consider giving you a loan if they think there may be difficulty paying it back.
A high credit score helps your chances of being approved by increasing the odds that lenders will work with and trust you enough to lend to you.
A healthy credit score is invaluable for property investors.
As a property investor, your credit score is one of the most important factors in determining whether you will be able to secure financing for your deals. Many lenders use credit scores as a way of determining risk and qualification – if you have a low or poor credit score, it may mean that it’s difficult or even impossible to get approved by lenders.
To boost your chances of getting approved by lenders and securing financing for your next deal, there are some simple steps you can take:
- Pay down outstanding credit card debt where possible (focus on those with the highest interest rates).
- Pay off any outstanding loans as soon as possible. Consolidation may be useful.
- Apply for new cards with reasonable limits so that they won’t negatively affect your overall score.
- Use a contract mobile phone, rather than pay-as-you-go. These are a credit line and report each successful payment positively onto your credit file.
In summary, good credit score can save you money on property deals
If you have a good credit score and your lender sees that, they will be more willing to lend you money. This means that lenders are more likely to accept you and give you a better interest rate.
If your credit score is poor or average, the opposite can happen: lenders might not accept your offer at all because they think it’s too risky. But poor credit is repairable, so don’t despair.
And if credit based lending is off the table, their are other investment strategies that could get you flying quickly.
Conclusion
If you’re a property investor looking for your next deal, it’s important to make sure that your credit score is in good shape. A good credit score will ensure you get the best possible deal on your mortgage lending and help secure future institutional lending to grow you investment portfolio.
