If you’re a newbie in the world of property investing and looking for some guidance, you’re in the right place. IGrow has answers for the most frequently asked questions after nearly 2 decades helping thousands of investors on their property investment journey. Here are some essential pointers on property investment for beginners.
We’ll cover:
- How much money do I need per month to start investing at IGrow?
- Is combined income considered if you need financing?
- Is securing financing hard?
- Is getting pre-qualified for a Home loan necessary?
- How can you get a 100% home loan approved?
- What will improve my chances of getting my home loan approved?
- Will my rental income cover my home loan repayment?
1. How much money do I need per month to start investing at IGrow?
This is often very first question IGrow investors ask. Great news! You don’t need to be extra wealthy to start your investment journey at IGrow Wealth Investments. Clients can start investing with a personal or combined household income of approximately R25,000–R30,000 per month, or even lower with some of our more affordable investment properties, (which are specifically good for beginners).
The exact home loan amount you will be able to secure depends on your affordability level, your credit score, and your choice of property. It is important to note that banks base their home loan approval decision on your affordability profile. This means they work out if you will be able to manage your home loan repayments or not. IGrow Home Loans has a handy affordability calculator that can help you do a quick assessment of your own, and our strategists will also help you through this process.
2. Is combined income considered if you need financing?
Yes, absolutely. If you are married or in a partnership, the combined household income is considered when you apply for a home loan. Affordability levels improve with a combined income. View our blog post on joint home loans and what they entail, ideal for property investment for beginners.
3. Is securing financing hard?
Securing financing involves strategy and procedures, but it isn’t that hard.
Especially when you lean on the expertise of home loan specialists such as those at IGrow Home Loans.
Banks are willing to lend money for investment property purchases. This is because investing in real estate is not a “high-risk investment”, as it involves a tangible asset. If the property has been assessed as being in a good area, with solid growth and income-generating potential, then the banks are often more amenable in approving a loan, compared to primary home buyers. If you have a stable, secure income, a good credit score, and you meet the affordability profile level, you have a great chance of securing a loan to buy investment property.
Partnering with an expert team takes the stress out of embarking on the journey of property investment for beginners alone.
4. Is getting pre-qualified for a Home loan necessary?
The answer to this question is:
“Yes, a pre-qualification certificate does help your home loan application process. It shows the bank you are approaching for a home loan that you are a serious buyer.”
Getting approval on your home loan depends on certain factors:
- Your gross income and your net income
- Any unsettled debt
- Your credit score and credit history
- Your current financial expenses
To note: IGrow Home Loans bond originators offer a pre-qualification process for their clients. This is prior to approaching a potential bank lender. After the pre-qualification process is complete, our team issues you a pre-qualification certificate.
This means that you will be fully aware of what you qualify for ahead of time. It takes the pressure off, and leaves you entering into the home loan application process with certainty and confidence. Banks react well to pre-qualified home loan applicants, as it shows you’re a serious buyer.
5. How can you get a 100% home loan approved?
Investing in rental property for beginners leaves novice investors curious as to how to secure a 100% home loan. A 100% home loan covers a property’s full purchase price. In these circumstances it is not necessary to use a deposit. Most of IGrow Wealth’s A-grade investment properties are available on 100% bond options. This is great for investors, as you have very little personal exposure – your tenant pays most of the costs of the property for you.
Applicants with good credit scores, a steady income and a good affordability profile can qualify for 100% financing relatively easily.
IGrow Home Loans has helped thousands of IGrow investors secure their first 100% home loan.
6. What will improve my chances of getting my home loan approved?
There are certain measures you can put in place to increase your chance of home loan approval:
- Maintain a good credit profile and credit score: Settle overdue accounts and avoid defaulting on payments. View our blog post that gives handy tips on improving your credit score.
- Pay off your debt before you apply for your home loan: Pay off as much of your credit card and any personal loans, as this will improve your affordability profile.
- Maintain stable employment: Banks favour applicants who have a regular income and stable employment record of at least 6 months in the same job, or good records of earnings if they are self-employed.
- Work together with a bond originator: IGrow Home Loans negotiates with multiple banks on your behalf. This is to improve chances of home loan approval and to secure a preferential loan term and optimal interest rates.
7. Will my rental income cover my home loan repayment?
This depends on a few factors. Property investment is a long game. Usually, for the first year or so, there can be a small shortfall that you pay in, to cover bond costs as well as rental management fees, and any insurance costs, levies, etc. This is usually not a very large amount (sometimes it’s just a few hundred Rand) and your investment strategist will go over the predictions for this amount and for how long you’ll need to pay it on our detailed Financial Analysis (which you can also see on all properties on our website).
Within a short time, your rental will have escalated, you will break even, and from then on out, your rental income should cover all expenses and you will start to ejoy your passive income stream. During this time, your home loan repayment has also decreased, and you will have built up some equity in the property that you can access.
This, in essence, means your tenants’ rental income pays off your home loan while your property accumulates in value due to property appreciation.
Our property investment specialists guide you to make a property investment purchase when the sums make sense. The rental demand in the suburb of choice should be high, and the home loan repayments should mostly be covered by a good rental income.
Conclusion
Embarking on your property investment journey can seem overwhelming, but with the right guidance, property investment for beginner investors doesn’t need to be tricky or scary! IGrow’s expert team is excited to help you through each leg of the journey.
Bear in mind, the earlier you begin investing in property, the bigger your portfolio will be when you reach retirement age. This also means you can leave a legacy to your heirs who can inherit your property portfolio.
Stay tuned for Part 2 of this blog post series, where we will answer more frequently asked questions.
Book a free consultation with an IGrow property investment specialist today, and let’s start your property investment journey with an expert team in your corner.
