In property investment field, bank loans are always stand in an important role when the property investors buying an investment property. But, how much loans should they really take when buying a property?
For those who have been attended property investment seminars, believe that these words are not strange to you. The speakers always like to encourage the newbies and existing property investors, borrow as much as you can from the bank and use your own money as little as you can to buy an investment property. This is the key to lead yourself to the success path in property investment field. Why should this be so? Here we explain to you why!
If you take the loan up to 90% of the property purchase price, it can give you with additional funds and lesser the interest rates to pay therefore making it the best move that you can make for a property investment. Bank loans can save more of your money so you can use that money to invest in other property, but only with the correct knowledge and methods.
Here, you will need to understand the different factors when you take up a bank loan.
1.️ The amount of loan that you are going to borrow
2.️ The period of loan tenure that you pay for the loan repayment
3.️ The interest rate which the bank will charge upon the loan.
Here are the ways that you should do when applying a bank loan to buy an investment property
1.️ Go for the maximum amount of loan that you can borrow from the bank
2. Get the longest period of loan tenure to pay the loan repayment
Extend the loan tenure mean you will need to pay the loan repayment in lower amount. And negotiate with the bank to offer the best interest rate to you.
If you follow this setting, the amount of loan repayments that you need to make each month or year gradually lessen because the interests lessen and the period lengthens. If you rent out the property to the tenants, make sure the rents are able to cover for the all expenses of property such as maintenance and the amount of loan repayment that you have to pay back to the bank every month. So, you need not to worry about the loan repayment and if the monthly rents are over the amount of monthly loan repayment, you can save the extra one into bank to earn interest.