- lender’s requirements
- borrower’s experience
- general risk profile
- credit history
The potential level of risk for the bank or mortgage lender increases if the borrower makes a smaller down payment, which increases the loan-to-value (LTV) ratio. In other words, the borrower might be more willing to walk away from the investment if it underperforms.
To compensate the mortgage lender for taking more risk, investment property loans with a higher LTV ratio usually come with higher interest rates and larger loan fees.
As you already know, investment property mortgage rates are usually higher than mortgage rates for primary residences. However, if your clients’ finances are in order, they can enjoy the long-term rewards. It’s vital that you help them weigh the risks and guide them on improving their strategies.
Finally, remember that your advice matters even when your clients are big-time property investors. So, make sure that you can explain the available property loan options and factors that affect investment property mortgage rates. By doing so, your clients can get the most out of their investment.
Looking for extra guidance? Visit Wealth Professional’s Investments section for expert resources, tips, and industry updates.