Know your Ratios for the best property investment loans in Campbelltown

One of the very first things you will have to do to establish your property investment business is to get first property investment loans Campbelltown. While most people have experience with their own residential property loans, getting an investment property loan may be a bit different as these types of loans come with some extra challenges.

The very first challenge is frequently the amount of money you are planning to borrow is possibly higher in an investment property instead of your residential property. The second concern to consider is not only your personal debt ratio but the debt coverage also.

While residential and business loans Campbelltown are more or less the same, they have different factors used to determine your eligibility to close regarding the loan. If you take some time to learn about the other factors that commercial lenders take into consideration, you will be well on your way to getting your very first property investment loan.

Part of doing the homework, before talking to a lender, is to realize that there are three general ratios which commercial lenders all utilize to judge the stake of an investment. If you are educated about these ratios you can sit with your lender in a better position as you are better prepared. Your preparation will make them more likely to do business with you.

The very first thing to consider is to look at the Loan-To-Value ratio (LTV). The LTV is also associated with your residential lending. It is just the total debt of the property in respect to the current market value of the property. If you have a home with a current market value of $100,000 and a mortgage of $80,000, then your LTV would be 80%.

While residential lenders are fine with lending at 80% LTV or higher, most commercial lenders utilize a standard of 75% LTV as the least they will usually lend on.

The second factor will be the debt coverage ratio (DCR) of your project. The DCR tells the lender how much income the property is generating with respect to the cost of the total debt on the property. The DCR is calculated by taking your net operating income and dividing it by the total of all the mortgage debt on the property. Most lenders need DCR of at least 1.2 to lend on an investment property. A DCR below 1.2 shows the lender that the property will possibly lose money.

The third thing to consider is your own debt ratio. If you have a small company, you will have to submit a personal financial statement as a guarantee on the potential loan. This debt ratio will show the lender how you handle your personal finances and if you can afford to guarantee the property investment loans Campbelltown.

About The Author:-

Skillful Financial Services Sydney is your most reliable choice for property investment loans Campbelltown and business loans Campbelltown. Visit us now and get all the information about our financial services.

Skillful Financial Services Sydney is your most reliable choice for property investment loans Campbelltown and business loans Campbelltown. Visit us now and get all the information about our financial services.