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  1. #31
    Join Date
    Jun 2005
    Location
    Mt Maunganui, NEW ZEALAND
    Posts
    1,463

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    Hi MGV,

    Don't be fooled into believing that you always need to be buying in order be a successful investor. What you need to be is smart.

    In the current climate it would be difficult (to say the least) to find prospective purchases that will improve your financial position enough (both equity and C.F wise) in the lenders eyes to allow you to keep buying.

    On the flip side, there are some excellent tips in this thread with regard to the very real risks of rising rates, use of revolving credit (R.C) facilities and ways to increase rent returns. I like Roscos suggestion of using your savings to knock down the principle on the loan with the highest interest rate using a revolving credit facility. This is IMHO sound advice. The use of an RC (or part fixed/part RC) gives you easy access to those funds should you need it, so the safety blanket is not lost.

    Paying the minimum on the lower interest loans and directing the surplus along with any remaining income, rent rises etc at the highest interest mortgage, reducing the RC loan, should make inroads to this quite nicely. It will also give you something that you can focus on and see diminishing weekly.

    Remember that this diminishing mortgage strengthens your financial position (equity and C.F) week on week which will benefit you when make your next purchase.

    If you have a good broker, ask them about what boxes your next purchase will need to tick in order to strengthen your financial position in the lenders eyes. It's quite eye opening.

    Buying the wrong property could weaken your financial position if not cripple you.


 

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