Investing in property can be a good way to make money. But if you don't have a high salary, you could face a challenge getting an investment property loan approved.
Whether you’re working part-time, a casual employee, or starting out in your career, it’s important that you understand your lender’s criteria to improve your chances of achieving your property investment goals.
Here are some tips about how to buy an investment property on a realistic income:
Pay off your debts
You have a better chance of getting your home loan approved if you have no other debts. The less liabilities you have, the more inclined the lender will be to approve your loan.
Save for the deposit
The more money you have saved for the deposit, the better your chance of getting a loan approved. As well as reducing the risk to the lender, it demonstrates that you are good at handling your finances.
Consider investing with someone else
If you can’t afford the deposit, you can opt for a joint investment. Ask a family or a friend if they want to invest with you, and if they can help you with the down payment. While there are benefits in joint ventures such as combining two incomes to handle the mortgage repayment, there are also risks involved since each of you will be liable for the loan. If your friend can’t pay, you will be responsible for the whole loan.
Keep in mind that investing in property with a modest income is possible if you have the discipline to keep a tight rein on your spending and partner with a trusted friend or family member.