Finance - New Lender?

Discussion in 'Property Finance' started by d6v1d, 18th May, 2012.

  1. d6v1d

    d6v1d Member

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    Hi there,

    My fiance and i bought an apartment last October in NSW with the first home owners grant. We lived in it for six months and have recently leased the property as we have relocated overseas.

    Early next year, we believe we will be in a good position to buy another property with a combination of the equity in our first property and the amount of $$$ in our off-set account. We are living in a developing country and paying extremely cheap rent.

    My question is, is it best to borrow from the same lender or go with a new lender? We are currently with the Teachers Credit Union who have a very competitive variable rate at 6.39%.

    We are new to this game and any advice would be greatly appreciated.

    Thanks

    Dave
     
  2. Aaron_C

    Aaron_C Finance Broker

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    It depends. Generally speaking if you want to build a property portfolio you need to go with different lenders.
     
  3. d6v1d

    d6v1d Member

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    Thanks for the reply.

    We would definitely like to expand our portfolio in the future. If we were to go with a new lender, considering we currently don't have a primary place of residence in Australia (and won't for the next 2.5 years), what is the best strategy to service the two loans?

    Would the best strategy be to pour all our available $$$ into one of the loans and pay the minimum loan repayment on the other?

    Thanks
     
  4. jonmardell

    jonmardell Mortgage Broker

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    the benefits of staying with the same lender is you would most likely get a better rate by increasing your borrowings and pay less fees. The negative side is have all your security tied up with the one lender can be restrictive.
     
  5. Aaron_C

    Aaron_C Finance Broker

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    Being a foreign-resident is not an issue. Best to put your money into an offset account which reduces your interest repayments. By the way - that rate your paying isn't the best - there are better offers out there these days depending on LVR and loan amount.
     
  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker/strategist

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    Personally I wouldn't be concerned about 2 and perhaps 3 properties with the same lender. It depends on your personal risk profile, and as suggested you can often get a slightly better rate based on total lending volume.

    I can't say if there's a problem with being an ex-pat and borrowing capacity. Many lenders will allow people to borrowing whilst they work overseas. There are a number of variables which depend on the lender, the LVR and the currency and manner in which you're paid.
     
  7. Jamie M

    Jamie M Mortgage Broker - Oz Wide

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    Same - and as John mentioned above, once the total borrowings reaches a certain amount, you can often negotiate a further discount on the rate.

    I think there's a common misconception that having two or three loans with the same lender can mean they're crossed - this isn't the case, they can still be stand alone.

    Having said that, there's no general rule and it depends on the individual circumstances.

    Cheers

    Jamie
     
  8. Rolf Latham

    Rolf Latham Member

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    Hi Dave

    Interesting how perceptions and markets change over time.

    Not knowing what product you are on etc, and your actual vs perceived needs, but there are a dozen or more lenders that have signifcanlty better rates today, Heritage being one at 5.99.

    Having said that, the availability and security of funds is more important than the rate per se.

    We have refinanced a couple of folks out of TCU in recent years, simply because TCU were not able to provide more funds on existing equity due to a low serviceability model and "ma and pa" loan mindset. There is nothing wrong with that, it just means they arent necc suited to someone looking to build a portfolio. Most Cu's are designed to work for the average punter, not a successful property investor.

    I believe TCU is soon to become a bank............

    ta
    rolf
     
  9. d6v1d

    d6v1d Member

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    I believe TCU is soon to become a bank............

    Hi Rolf,

    Yes TCU is now Teachers Mutual Bank. What implications do you think this will have in terms of the products and services they can offer people looking to build a portfolio?

    Cheers
     
  10. Rolf Latham

    Rolf Latham Member

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    Not a cracker :)

    I was told they did it so they could cheaper funding.........................

    ta
    rolf