Investor Interest Rates

I pose the question. For an investor doesn’t it really all come down to interest rates at the end of the day? I would definitely agree that the more debt you carry the more you will feel those up and down increases and the more out of pocket you would be if you’re only say 0.20% above the best rate around. But is this the only deciding factor when looking to grow your property portfolio?

What I have observed to be the case in many instances, is that it is your smaller lending institutions like credit unions, community banks and the like, at face value tend to carry some of your most competative interest rates.

So where’s the issue with chasing the greatest rate? If your single goal in life is to own your own home and pay off that mortgage as quickly as possible, then nothing. However if you’re considering going beyond that then there is so much more you need to consider.

Many of the smaller lenders choose not to carry as higher level of risk as other lenders, they tend to put the brakes on much sooner. This means that based on your income, assets and liabilities you won’t be able to borrow as much money into the future, therefore limiting the number of properties you can accumulate.

This can particularly be the case if you choose to fix with these lenders as you will inevitably be faced with the decision of paying high fees to break out of your loan to buy that next property or wait out the term of your loan and lose that great buy.

So as you can see there really are so many more questions that need to be considered when funding your property. We don’t have a crystal ball but as much as possible we need to be considering the future and the consequences of our decisions now. What is it they say, ‘short term pain for the long term gain’!

Who you take advice from to grow your property portfolio is of high importance, so stop and ask the question – “Are you a property investor yourself”?