Is the lowest rate the best rate for me?
There are many lenders outside of the Big 4 Banks vying for market share. Some lenders have even registered new entities to have some of their deals set at arm’s length, but still make a tidy profit.
Typically, these new entities sell the public on low rates, but the experience becomes so traumatic, that many do not follow through. That potentially is another person failing to enter the property market and get their first step on the ladder to financial freedom.
Think of finance as the fuel you put in your car. No-one buys a brand-new car, just so they can fill it with fuel. Fuel is just one necessary component of owning a car, but is not the main reason for it.
Necessary Components Of A Deal
Finance for your property is just one necessary component of a deal, it is not the main reason for it. Nor will it be your biggest expense. If you are in the market for a Buy / Reno / Flip, then the right lender for you is the one that will give you finance. If you have several options of finance available to you, of secondary importance may be fees. Rate almost does not come into the equation, as the hold period may only be a few months and the fees of some lenders may far exceed the interest paid on the loan.
In many instances, clients opt for an interest only loan, which saves money in the short term, though having paid off some of the principal of the loan, only means more profit is realised at the time of sale. In the balance of things, it levels out.
When flipping property is your choice, then the work required to find the right deal, should take up most of your time. As you may already know, once you’ve found the deal, you then have many moving components to worry about – finance, trades, agents and then there is of course the project management component.
A Support Group That Helps
The School of Renovating has an amazing program and if you’ve already completed the course, you will understand exactly how much time is spent researching a deal. Your time is therefore very important and has significant value. It then makes sense to employ resources that can do some of the work for you.
An experienced buyers’ agent can possibly find you a suitable property in a matter of days, rather than months.
A reputable trade is worth his weight in gold. You can’t have the shower installed, until the waterproofing has been done and there are few things worse than an unreliable trade.
Just the same way, a good broker can save you time and money. Experienced renovators have good brokers who ensure tailored finance is available, when they need it, while keeping costs to a minimum.
An experienced renovator would potentially spend an hour or less with their broker to arrange finance. An inexperienced renovator will spend hours upon hours researching different lenders and their products and may complete several applications, with different lenders before they either are successful or there are so many hits on their credit record, that they face out of hand declines.
To be efficient and successful, you need a great support structure.