How to purchase an investment property with bad credit

By Angela Monroe - December 5, 2018

If you have bad credit, it shouldn’t mean that you don’t have the opportunity to explore the investment property market. There are so many ways to get involved with an investment property in Australia, and many of these could help you make money and get you back to financial stability.

Before you consider applying for investment property loans with bad credit, it will be useful to speak to Loans for People with Bad Credit to understand where you stand and how you should approach the process ahead.

Find out how we can help you with bad credit home loans.

Understanding investment property loans with bad credit

When you’re considering applying for an investment property loan, you need to be clear on when you’d use this type of loan.

You will use it to buy an investment property instead of a home that you would live in yourself. Generally, people with bad credit do not consider this type of loan as they are reluctant to approach lenders to ask for them.

In some cases even if you have bad credit, you might still be able to get an investment property loan.

How to purchase an investment property with bad credit

If you have bad credit, it’s really important that you are certain that you can pay back an investment property loan. You need to factor in all additional costs that come with owning an investment property including:

  • Valuation fees – you should budget at least $400 for a professional valuation of an investment property
  • Loan fees – these can be higher if you have bad credit
  • Legal fees – these are unavoidable and can often be hundreds of dollars
  • Transfer fee – you’ll need to register your name on the property title to ensure an official transfer of ownership on the property

Talk through your specific financial circumstances and the reasons behind your bad credit history with Loans for People with Bad Credit if you’re unsure whether or not you’ll qualify for investment property loans with bad credit. We’ll be able to quickly advise you and direct you to the right lenders for you.

Deposits, borrowing and loan terms

If you do have bad credit, one of the best things you can do when considering an investment property loan is to make sure that you have a good deposit. Usually, the minimum deposit you’ll need for an investment property is around 5% of the purchase price. Do your sums and figure out whether you can afford to do this without stretching yourself financially.

The amount you can borrow will vary between individuals and different lenders. People with a good credit history usually expect to borrow up to 85% of the property purchase price, so with bad credit the amount is likely to be slightly lower than this.

Loan terms on investment properties can also vary, but are likely to be shorter for people with bad credit. This is often inevitable, but you should speak to us if you feel that you’re being offered unfair loan terms and expected to get a better deal.

Repairing your credit

If you’ve been rejected for loans, you may want to think about ways to improve your credit score so that you’re in a better position to apply again in the future.

Some tips to getting a better credit score include:

  • Check your credit record – this is free and easy to do. If there are mistakes or inaccuracies, you can ask for these to be changed or removed to improve your credit score.
  • Show evidence of a stable income – this could be through regular payslips, proof of employment or an income showing in your bank account each month
  • Show evidence of responsible borrowing – it really helps to be able to show a potential lender evidence of previous loans that you have paid back on time and in full
  • Budget responsibly – only ever spend what you can afford to. Don’t take a loan out if you can’t afford to make the repayments in full and on time each month.
  • Avoid multiple applications for credit – lenders will be able to see that you have applied and been rejected for credit and this will raise alarm bells to them.

Ask for help

Loans for People with Bad Credit has years of experience working with people who have bad credit. If you’re wondering whether you can apply for an investment property loan with bad credit, speak to us today to find out how we can help you.

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.

Comments

No comments yet.

Leave a comment.

  • Quick Quote

  • Related Posts