1 Loan or 2

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From: Anonymous


Hello all

We were given bank approval to borrow $200,000 on a P&I loan.

We went shopping and have had offers accepted on two properties, $98,000 and $120,000. We will put in the shortfall and pay purchasing expenses. Additional security is by an existing IP financed through the same bank.

My question is: Is is advantageous to have a separate loan for each property. One disadvantage is paying the $8 per month service fee on 2 loans.

We plan to renovate 1 property immediately & therefore increase equity. The other property is tenanted & we will leave it as is for the time being, but will renovate later.

Would having one loan for both properties make accessing increased equity more difficult?

Jane
 
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Reply: 1
From: Rolf Latham


Hi There

Two Loans tends to be a more flexible scenario in that you can take each loan to a different lender. This is especially important where you may want to do a reval AFTER reno etc.

Many people get stuck with bad vals simply because they cant easily get out of the existing cross collateralisation - two props securing one loan.

Negoatiate to pay lower fees OR move to lender that wont charge them but be careful to look at the overall picture, maybe paying 8 bucks a month is cheaper overall than a diff loan at a higher rate.

Ta

Rolf
 
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Reply: 2
From: Russell Chellew


Hi Jane ,

It would provide more flexibility to have separate loans with separate security ie easier to refinance if lender is providing grief.

If you are considering purchasing further Investment properties ,it may be worth considering lenders who offer "professional/Investor "type package whereby you can obtain interest rate discounts and have multiple loans with no application fees.


There are quite a few of these packages available (lenders do not readily advertise these packages )

Cheers


Russell
 
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Reply: 2.1
From: Anonymous


Thank you. Your thoughts are appreciated.

Jane
 
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Reply: 2.1.1
From: Wy Cee


Lenders who charge monthly service fees pisses me off. There are plenty out there who dont charge such fees & also offer extremely competitive rates.
cheers
 
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