EXPANDING your property portfolio is an exciting proposition and one that need not be stressful.
Obtaining a mortgage on your second, third or fourth property has previously been a painful experience but the winds of change are upon us and multi-property loans are now becoming increasingly likely.
With the guidance of a broker the daunting prospect of a multi-property venture can be a pain free experience.
Up until recently banks were reluctant to lend for clients building their property portfolio, because of a weak rental market.
But with the rental market now picking up, I know of at least one bank which has changed its tack and is now offering loans on second or third homes.
Within the last six months, banks are seemingly happier to try something different, dropping the ball and chain which has restricted them over the past few years.
And if my experience has taught me anything, it is that where one bank goes the others quickly follow.
That said, the banks are not throwing their money into the breeze.
The usual mortgage loan procedures apply when seeking a multi-property loan. In other words a client must have the required deposit and correct income balanced against their monthly outgoings, including the new loan commitments, as this is still the key calculation to work out when lending.
It is also important to note that the bank is not likely to include the Spanish retail income in this calculation.
That is why the usual broker-client strategy is imperative when applying for this kind of loan.
But if you can prove your existing income is sufficient to support loan payments then I see no reason why come banks wouldn’t agree to loans on multi-property purchases.
However, all said, I do have a few sage old words of advice for those developing a collection of properties.
First of all, make sure the properties you buy are suitable for the surrounding area and the people likely to rent. For example, don’t buy an apartment on the outskirts of town and expect to achieve short-term (holiday) rentals.
Second of all, buy property in an area that has varied facilities. This obviously depends on where you’re buying, but schools, supermarkets, restaurants and transport facilities are always a plus.
My third and final piece of advice – and the most important to you, the property purchaser – is to not put all your eggs in one basket.
In other words, spread your property portfolio across different areas and property types to spread your risk.
With all that in mind, a trip to your mortgage broker should be the first step you take on the road to building a property portfolio.
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