Home Improvement Loans and
Flipping House Finance
If you need finance for flipping houses, renovating properties, home improvements, or rehabbing homes, you obviously want to make yourself as attractive as possible to banks and other lenders.
Collect copies of as much relevant financial information as you can - income details such as payslips and rent receipts, tax returns, bank and credit card statements, assets (eg other property, stocks, bonds, motor vehicles) and liabilities (eg property and personal loans), and an estimate of your monthly expenses. If you will be borrowing through a company or trust, you should include a copy of the company registration or trust deed. Lenders like to minimise risk - the more information you can give them, the more comfortable they will feel about lending you money.
But remember, you hold some of the cards! Banks want to lend money, and there is fierce competition between lenders for your business. Shop around, but don't just compare interest rates. There are many variables that make up a loan "package", and you should look for a loan that provides the best combination of features for your situation.
Some of the features to look for include: fixed or variable interest rates, interest-only loans (which may be interest-only for some or all of the loan's term), application fees, monthly or annual fees, maixmum loan-to-valuation ratios, early repayment fees, portability (the ability to transfer the loan from one property to another), redraw facilities, and whether the lender requires you to pay for loan insurance.
Many loans are designed to only cover the actual purchase of the house, so if you plan on flipping the house, you'll also want to consider how you'll pay for repairs and holding costs until you can cash out on the property. Cash is always king, but putting certain expenses on business lines of credit or a Lowe's business rewards card can be effective for the short-term as well.
The key point is: compare, compare, compare! Look at as many different property or home improvement loan offerings as you can. Pick the two or three most suitable for further discussion with the respective lenders. They may negotiate on some elements of the finance package, in order to get your business.