Ones like ANZ or Heritage would be examples.
Finance wall
- Thread starter strongy1986
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Ones like ANZ or Heritage would be examples.
Help with what?
early choice of lender can stunt an agressive portfolio build, however if you havnet got more than say 3 properties now, and are working, its quite simple to refinance/restructure and put you back on the right path.
Is ANZ a good place to have your PPOR? It depends on your personal circumstances.
Is ANZ a good place to have your PPOR? It depends on your personal circumstances.
If your application is marginal on certain grounds, being an existing client will influence the banks decision and they're more likely to approve the loan if you've been a good client.
If you haven't been a good client (overdrawn accounts, late payments, etc) they're more likely to reject your application.
An example of where we've gotten a deal through for an existing customer would be with a certain lender who won't look at more than 2 unit developments. Due to a good ongoing relationship with the client they were willing to make a policy exception and go to 3 units.
Being an existing client rarely helps with the affordability calculation. For example ANZs calculator comes down to a 'surplus cash flow' figure. If it's $1 in the positive, they can approve the loan. If it's not, they decline it. There's sometimes a little leeway, but not much.
Well my two cents worth ..based on a portfolio nearing 8 figures....with a 30% LVR
Some tips:
1. The portfolio needs to have good cashflow as well as good capital growth. Typically target properties with 7% yield with 7% growth average.
2. Diversify across lenders....try not to have more than $950k in lending with any one lender as a rule of thumb
3. Use LMI where possible...cash is king and gives you more money for more properties. Also diversify across both Genworth as well as QBE...as they will at some point not finance via LMI as rule of thumb is it when you have more than $1.5m in borrowings.
4. Refianance properties bought with LMI when they increased in value and the LVR is 80% of less. This frees you up for more LMI based loans.
5. Push rents up regularly.
6. Properties with higher depreciation are very handy as this gives you a nice check yearly to pay down loans. Pay down loans regularly...or at least have a offset where you pay your expense on a credit card and pay down at the month end.
7. Having a high income (more than 150k) helps.
8. Get educated how the banks lend money...and how they calculate lending. Understand your strategy well and sell this to the bank. I feel that people who build large portfolios understand both minutae as well the strategic view well.
Some tips:
1. The portfolio needs to have good cashflow as well as good capital growth. Typically target properties with 7% yield with 7% growth average.
2. Diversify across lenders....try not to have more than $950k in lending with any one lender as a rule of thumb
3. Use LMI where possible...cash is king and gives you more money for more properties. Also diversify across both Genworth as well as QBE...as they will at some point not finance via LMI as rule of thumb is it when you have more than $1.5m in borrowings.
4. Refianance properties bought with LMI when they increased in value and the LVR is 80% of less. This frees you up for more LMI based loans.
5. Push rents up regularly.
6. Properties with higher depreciation are very handy as this gives you a nice check yearly to pay down loans. Pay down loans regularly...or at least have a offset where you pay your expense on a credit card and pay down at the month end.
7. Having a high income (more than 150k) helps.
8. Get educated how the banks lend money...and how they calculate lending. Understand your strategy well and sell this to the bank. I feel that people who build large portfolios understand both minutae as well the strategic view well.
hey sash, thank you for some excellent tips. Just one question on 4. Wouldn't it be more cost effective to top up this loan as you're not re-paying LMI for a new loan and would only be paying a small amount for the top up (assuming you get a credit)? Otherwise you'd be paying lots more LMI as I see it. With the top up you have cash and can use that for next deposit and avoid LMI.
To me LMI is the cost of doing business...besides it is tax deductible. I generally put 7-11% down and buy properties under $400k so the LMI is less than 7k usually. This is tax deductible...so really I am only paying $3.8k odd as I at the top rate of tax (46.5%).
I keep any savings as cash offsets as they can be used for anything whereas revalued cash pulled out of a loan can only be used for investments.
Doing it this way you can build your portfolio much quicker....
I keep any savings as cash offsets as they can be used for anything whereas revalued cash pulled out of a loan can only be used for investments.
Doing it this way you can build your portfolio much quicker....
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