Making The Most Of Investment Property Mortgage Rates In Victoria
Investment property mortgage rates in Victoria are very reasonable at present. There are advantages and disadvantages in putting your money to work for you in property. One of the disadvantages that prevent many people from exploring this type of investment is the fear that investment property mortgage rates in Victoria will change drastically.
Investment property mortgage rates in Victoria can be seen as a lifeline for many people who cannot obtain a conventional loan from a bank or other type of lender. The property owner can be seen as a way in to a home while they make a good return on their money.
The following are the minimal things that an investor needs to know about investment property mortgage rates in Victoria before they get into the market. The list will also help people looking for alternative financing understand how the system works.
The prime rate is 2.85 percent. Loan rates vary from 2.29 percent for a one year closed loan to 3.84 percent for a ten year closed loan. The majority of real estate investors cannot afford to buy property out right.
The concept that you are dealing with is a private mortgage. You are the property owner. You offer a mortgage to a buyer. The details of the arrangements are usually handled by a real estate company or an investment company.
The profit potential
First time mortgages have an average return of 9.5 percent. Second time mortgages have an average return of 18 percent. The returns are calculated before any costs involved.
The first year’s returns will be lower because of real estate fees and closing costs.
Maintenance of vacant properties is the responsibility of the owner.
Most regular lenders will only lend between 65 percent and 85 percent of the value of a property to a potential buyer. The ability to acquire a home is therefore limited to ready cash.
An investment property does not have the financial limitations. Any payment structure can be negotiated between the buyer and the owner. A lease to buy arrangement is a common option. The simple idea behind the profit is that an individual becomes the bank for people who cannot afford a home through the “normal” channels.
Personal or impersonal
The investor can hire an agent to handle all of the details for them. Some investors take a more hands on approach and want to meet their tenants and potential buyers.
You do not really own a home
You own a part of a mortgage. You do not have to have the responsibilities that an owner has.
Investment property mortgage rates in Victoria could change drastically depending on a local calamity or a world event that impacts the global economy. The same risk would impact stocks and bonds. Property has the value of being permanent.
Private mortgages are not liquid. Your funds are tied up for at least a year.
The borrower is responsible for loss due to fire or flood. The contract for the mortgage stipulates the insurance coverage that is necessary so that the investor’s funds are secure.
Investment Property Mortgage Rates Victoria