Sunil,

Can one get a laon and use it as a deposit from a finance company in addition to a morgage issued by the bank to buy a property, or even start a property business?

i.e. based on the assumption that one doesn’t have enough money to put 25% deposit for the property

Ei

Sunil’s Answer

Hi Ei,

Thanks for the question.

Yes you can do that , borrow 25% as personal finance, and 75% as mortgage finance and buy a house, but the only thing you need to make sure of is that the cashflow from that property can pay for BOTH the mortgage and the personal loan.

For example, say you borrow 25,000 as a personal loan, where your payments are 400 a month, and your mortgage comes to 600 a month, then the rental income from the propery has to be more than 1000 a month to make a profit.

In practice your income should be more than 1000 as you have to factor in vacancies and maintenance etc.

My rule of thumb is that the income on any property needs to be DOUBLE the mortgage (or more).

If the property your looking at does not have rental income that covers both your payments, I would call it a bad deal!

Thanks again for the question

Good luck with your investing

Sunil