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My finance applications
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| “Show me the money” |
Wow getting finance over the years has changed as much as my grandson’s nappies! |
| Finance in the old days was about how much you could bullshit to the bank. I am not kidding; everyone I know had to present false letters of employment to show better salaries. False letters of recommendations to show you as a good person and even false pay slips to prove what you were saying was correct. |
In fact it was so common that the finance companies had to allow for the misleading information, by making the rules to assume that you lie about your income. |
I was invited to a function by my Finance Manager back in the 80‘s, at the time I had several properties that were financed through one particular finance company, they were launching a new product aimed at investors. |
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The presentation went well and the product seemed very impressive, they offered an easy way to get finance for my next rental property, however after a few drinks I did say to my bank manager, you seem to base your loan requirement on investors having 30% of your income free for loan repayments, that seems quite a lot.
He responded by saying well we only need you to have around 15% for a rental property, the other 15% is to allow for the bullshit income that all investors seem to present with their applications. |
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This surprised me that they knew this so I responded “so what happens if I don’t bullshit and put in a true income statement or pay slip?” His comment was “that would mean you would have Buckley’s chance of getting a loan” |
These days the finance companies are much better at checking your history, and they need to see the income shown in your bank statements, however they do not require such high incomes to get that rental property. |
I have found that going for finance is a little like Double Indemnity, if you get it wrong it comes back to haunt you! |
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My Tips and common sense on :Rental Properties
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Check your broker has experience! Even if they are recommended to you. |
Interest only finance |
Interest only finance monthly repayments are less than they would be if you were paying off principal as well. |
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