Investing in property is still one of the safest ways to build an asset portfolio and secure your future. But for many people, putting together enough money for real estate in Perth just isn’t possible – which is why there are so many different creative finance solutions available. Though loans and other forms of financing can seem daunting, the prospect of growing your net worth and setting yourself up for retirement is often more appealing. There are many different ways to set up financing for your potential property.
This is the first option that many look to when searching for ways to finance a home. It involves borrowing the amount you require to pay off a mortgage from a bank, credit union or home loan company – and setting up a plan to pay the institution back. These loans can usually span up to 30 years, and require at least a 10% down payment on the sum. Institutions generally require full documentation of your income and debts. This is the most well-known method of gaining finance – but may not be right for your circumstances.
These are the options that buyers generally turn to when they require a more creative method of financing.
Seller Carry back
This method occurs when a person who is selling their home is happy for the investor to pay off the amount asked in monthly repayments. The seller usually puts a time limit on the repayments, meaning many buyers will need to refinance towards the end of the agreement to continue paying off the house: however, it is easier to acquire a refinancing loan than to acquire a purchase loan.
This is a short term solution, and involves a title transfer but the loan will stay in the initial seller’s name, while you make ongoing payments. This is a good method for those who can’t come up with an initial down payment, but who will be able to refinance down the track when a seller wants to transfer the loan to the buyer.
The seller provides a second mortgage, which will usually be just large enough to cover a down payment. It’s important to check that the loan you are applying for will allow a second mortgage to be attached to it.
If none of the above methods work out, there is always a lease option – move into the house with little to no money as a down payment, but gain the right to buy the property down the road (usually in a few years). This allows for time to gain financing and to pay off some of the mortgage with rent payments.
There are many different ways to finance an investment property or new home – it’s about doing your research and finding the method that suits you and your lifestyle. Get in touch with ACTON Property today to discuss Perth property and financing options.