We’d all like to start investing our way to financial security, and having a well paid job certainly makes that task a lot easier. But don’t be put off if your job doesn’t put you in the higher pay brackets, you may still be able to kick start that property portfolio.
Tips for those who wants to start investing but whose day jobs don’t pull in the big bucks:
GETTING A LOAN
The more closely you fit a lenders’ criteria, the happier they’ll be.
A lender looks for:
- a record of steady employment for at least the last 6 months, preferably longer
- a good declared income to the tax office for the last two financial years if you are self employed
- permanent residency or Australian citizenship, although temporary residents and non-residents can get loans if no mortgage insurance is needed, i.e. the loan is 80% or less of the value of the security property
- an unblemished credit record, even quite small defaults (for instance to telephone companies) can derail an otherwise strong application
- a track record of saving – amounting to at least 5% of the value of the property – if you’re a first home buyer.
Lenders vary on how conservatively or loosely they assess such things as
- your living costs
- the net rental income you can expect from investment properties
- the extent to which interest rates might rise above their current level,
so you need to check with them separately in relation to your own circumstances.
Source : Your Investment Property (3 August 2011)