Debt is something that affects us all at some point, it’s more or less a given that if you want to start making money with something then you have to borrow some funds to start off with. There’s no sector that this applies to more than the rental property sector; almost all landlords will have, at some point, to borrow money to get started.
There are, however, various ways of managing your debt and making sure it costs you as little as possible. What are your likely borrowing needs and how can you make sure you can access them at the lowest cost?
Mortgages
Most landlords will have to start off investment with a mortgage. There are huge variations in the deals available and it’s very dependent on the market at the time. To guarantee the best deal try and offer the highest deposit you can and look to renegotiate, or change mortgage provider, when the market suits. Make the most of fixed interest deals but be sure that when they expire you rethink them.
Loans
On top of your mortgage it might be appropriate to borrow smaller sums from time to time; it might be that you’re looking to sell up and so want to renovate to maximise value from your property. The best thing here is to talk to your existing lenders before anyone else; usually they will be able to offer you a favourable deal.
Credit Cards and Overdrafts
For small, short term borrowing both credit cards and overdrafts can have their uses. You may, for example, be in the process of claiming back damages on your Landlord Insurance but be keen to get repairs underway. Providing you know when your payment is due from your provider, you can negotiate credit which, in turn, might help you get tenants back in your property faster.
Debt and credit is an invaluable tool and, even if you hope never to use it, it’s nice to have the knowledge that your bank will back you up in times of need. Always research any credit you look to take out carefully, and it can’t be stressed enough that you should shop around – the best deals aren’t always the most obvious.
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