Skip to content

Property Investment Finance Video 2

2. What are the 4 C's of lending?

Most people have heard of the 4 C's to diamonds - Cut, Clarity, Colour and Carat. Successful investors also know the 4 C's of lending.

Knowing how the banks work will ensure you are prepared.

Click Here for video 3: Borrowing Capacity

or if you missed video 1 - click here

Transcription:

Did you know the game of property investing is not a game of real estate, it's actually a game of finance and numbers? So how is it you're going to be able to secure finance to make sure your 80 of property investment portfolio can grow safely?

It all comes down to the four C's of lending. My trusty little traffic light over here says you're going to need four green lights, no red, no amber. Every single coaching session we do with our clients, we do this this little war game, we do this little stress test. How do you stackup as far as the finance goes? Because you can have all the intent in the world, but if the numbers don't stackup it ain't happening. Let me step you through it now.

The first thing you need to be able to demonstrate to the banks is that you have deposit and casts set aside, and that is capital, which is cash, or collateral which is equity. So you need to be able to basically say that when the banks you up to 80 or 90% you can tip in the other 10 or 20%, as far as the deposit and costs go.

As you'll move across here, you also need to have the right employment, be of the right age, have the right spending habits and online character as they call it. Banks love defense members. So don't be too concerned there. As long as you're not having Uber Eats, or going to the casino, or some dirty online habits there too much, then you should be fine about getting that element of your four C's sorted out.

The next thing you need, little bit like opinions, little like our souls, everyone's got one a credit rating and a credit history. Make sure you pay your bills on time there so you're not stuffing a few things up.

The last one, I suppose this is when it really matters. If you can't have the capacity to borrow the money and service the debt, because maybe you've got a couple of credit cards, you've got a high purchase loan, you got a couple of kids, the Mrs. is not working anymore, whatever it's going to be, then basically you're going to be stuck at the top here.

As I said at the start, you need four green lights. No amber and no red. Get your finances in order, and you will be successful.

Disclaimer:

Tax laws, interest rates, stamp duties and other considerations are constantly changing and the accuracy of the information contained on our website, social media sites or in any presentation is only current as at the date of its delivery.
This information and any examples provided do not constitute financial, legal or tax advice. We have not analysed or reviewed your personal circumstances. Where appropriate, you may need to obtain financial, legal, accounting or tax planning advice from a professional before implementing any wealth-creation strategy based on investing in property.

Axon Property Group, nor its respective directors, servants, employees or agents will be liable to you for damages, direct or indirect, including any loss of profits, loss of savings or return on investments or any other incidental consequential damages arising out of or connecting with the utilisation of or inability to utilise the financial and property concepts illustrated in this presentation.

None of the parties specified accept any responsibility or assume any liability for any accounting or investment decisions that you may make based on this presentation or in respect to any claim made by any other party.

You acknowledge and accept that the entire risk of making an investment in property, and the results and performance of any such investments, are your responsibility and no liability attaches to Axon Property Group. This disclaimer is to the extent permitted by law.