Real estate investment is increasingly becoming popular among the developers as well as end users due to its good returns and as a cushion from inflation. However, despite its lucrativeness, it requires money to venture into it. If you’re not sure whether you qualify for a bank loan or you’re simply hesitant to engage banks, you may wish to consider other alternatives as listed below:
Borrowing From a Family Member
For a long time, the family has been the friendliest source of borrowing money. If any of your siblings or parents are in a position to lend you money, go for it. Chances are that you’ll get it at a relatively low-interest rate than what banks charge. However, make sure that the terms under which you’re borrowing from a family member are well defined. Remember to honour the
In some rare instances, particularly when the property has been on the market for a long time, the seller may decide to finance the buyer. It may not be the best deal for the seller, but you may reap the best benefit if you buy it. This mode of financing inks the deal much faster than pursuing a bank loan.
Rent to Own
You can also adopt the rent-to-own model that is usually a straightforward plan. You agree to pay rent for a certain period, after which you buy the house. This option requires full commitment if you have to benefit because if you decide not to buy, then you lose the extra money paid. However, if you proceed to the end, then the money you’ve paid is added to the final purchase price. Overall, the rent is higher than the prevailing market rates.
Take the rent-to-own option if you’re planning to own the house within three years but are cash-strapped. Three years are adequate for you to get more money or improve your credit score. It’s all about the convenience of getting a place to stay with the potential of owning it later.
What You Need to Know About Traditional Financing
The market crash had made qualification standards for financing stricter, but they’re now loosening. Nevertheless, there are basic requirements that you must fulfill before approaching a lending institution for financing. It’s critical that you have a high income, a sizable down payment, and a good credit score.
It’s crucial that you first understand your financial situation before applying for a conventional loan. If you’re unsure about yourself, then it may help to engage a real estate financial specialist for some advice.