This article follows on from last month’s discussion about why it is crucial to ensure your solicitor or mortgage broker works for you 100% in any property investment dealings. They must understand what you are trying to achieve and what your goals are in the next five to 10 years.

As I mentioned in the previous article, we often see many amazing deals fall over due to a solicitor’s lack of property investment knowledge, but that aside, another of the big reasons why property transactions don’t go unconditional is finance issues.

I want to discuss the topic of finance issues and how you can avoid them further in this article.

Not Enough Equity Or Cashflow

You may not actually have enough equity or cash flow to service debt, which means you aren’t yet ready to buy property. Don’t assume that you are, and see your bank or mortgage broker to find out everything before you waste your time or theirs.

Once you establish that you don’t have enough funds, you can look at the strategy that will suit your current position, like saving for a limited time, paying debt off or maybe looking at the “bank of Mum and Dad” option or another way of sourcing funds if you are determined to get in the property market.

But don’t waste your time looking unless you are ready to buy. When you have your finances sorted and pre approvals in place, you are in a much stronger position to negotiate.

‘A specialist mortgage broker understands property investment inside and out and the type of investment you are purchasing’

Bank Or Broker

I personally hold a strong opinion about having a good mortgage broker on your side. However, if you have a fantastic relationship with a bank/banker and are a one strategy type of person, then I suggest you should keep talking to your bank.

Although, if you are planning on buying multiple properties in the future, you should be aware of some trigger points (one bank trap) of why you really need to use more than just one bank. It is nothing to do with loyalty, but rather protecting what you own.

What I love about a good mortgage broker is that by helping you and getting to know you, they will most likely become a key person in your “team of experts”.

Everyone’s financial situation is so different when they look at buying a property: married, single, with children, receiving or paying child support, own five properties with five banks, own five properties through one bank, government employee, self-employed, one grown-up child, six children at home under 10 years of age . . . the scenarios are infinite.

Some banks will take you with open arms and others won’t want you near them. So besides the mortgage broker’s knowledge of the most suitable option for you, they can also get lending through nonbank organisations. Do I know what bank is best for a particular situation? Heck no. However, my mortgage broker does.

Specialist Mortgage Brokers

Unfortunately not all mortgage brokers are equal. So you need to find one that is an expert in property investment and understands what you are trying to achieve. You may want to ask experienced investors or buyers whom they use.

A specialist mortgage broker understands property investment inside and out and the type of investment you are purchasing. Another major reason that I see deals falling over is when banks and mortgage brokers delay actioning your application. You need someone who is quick with the process and will be on your back getting anything needed from you on time to complete the paperwork.

Finance is slow to get approved, so the quicker you and your broker get onto it, the more chance there is of getting your finance approved. Make sure the broker is on your “team of experts”.