Will lenders give loans if the rental property from an investment property covers the mortgage?
There are two different ways to apply for a loan:
- As principal or secondary house
- As investment project (including buying or construction to sell or rent)
Most of individual customers, when buy properties for investment, apply for a loan for secondary house, submitting file for credit decision based on their actual incomes generated for all present sources, because approval is easier ( if you generate enough incomes for the proposed investment), banks finance longer terms, higher % of amount finance and lower interest rates.
In this scenario, customers don’t need to explain banks what final purpose for acquisition is, nor present any business plan for bank credit analysis
However, in general, banks are open to analyse loans for investment ( with worst financial conditions, as mentioned above ) analysing loan viability based on proponent background and project business plan, especially when we are talking about property acquisition for renting purposes.
It is, in fact, possible but risk analysis will be deeper and the quality of the property and project will be a key element on probability of approval.