Loan structure

Hi,

I'm about to purchase my first investment property and was wondering whether someone can tell me what the best way to structure my loan would be. I have an existing standard loan on my PPOR, but am open to the idea of restructuring that to assist with my investments.

Someone mentioned the best way was as follows:
* each investment property has a separate LOC account
* 20% deposit for each IP is in a separate LOC secured against my PPOR
=> ensure they are not "cross collateralised"

Any advice is much appreciated.

Cheers,
Simon
 
I suggest having a chat with a mortgage broker. Not xcollateralising is important further down the investment track, but can be cheaper and more efficient in the starting out phase of property investment. It really depends on your circumstances and plan for the future. In the end, if you are building a large portfolio, your likely to re-finance regularly, so rather than having a rigid structure, you are better off finding the right team, of broker, solicitor accountant etc, who can recomend diferent strategies as you grow.
 
I was just interested to hear how others have their loans set-up.

I spoke to a mortgage broker but they presented me with a whole range of options rather than guiding me down the path of one specific method.
 
I guess its about finding out what it is you want to do then. If I had a client who said they wished to purchase 1 IP every year for the forseeable future, I would recomend a pre-pack to start with, then when serviceabilty is reached with that lender, take ot one property at a time with another lender, to re-finance the deposit, and a third lender for each subsequent purchase. It would then start to look a little bit like you describe above, with LOC, and not Xed. I would suggest fixing at least part of the portfolio at this point, depending on their level of risk. Have a chat to another broker, some brokers get too focussed on giving many options to clients, rather than meting their needs. If your needs are to start an investment portfolio, then it seems as though a pro pack would suit to start with, as it rolls the app and ongoing fees into an annual fee, and allows annual re-structures, and valuations at no extra cost. There are quite a few other brokers on here you could IM to get another opinion if you like.
 
a pro pack is a professional package. Where the bank wants all of your business, they will wrap up all the fees, and package them in one annual fee. The advantage is you dont have to pay an application fee to add more properties to it, there isnt any monthly fees, they may give you discounts on the interest rate and all sort of other banking products. The disadvantage is its somewhere between 300 and 400 per annum. I think it can be a good place to start a portfolio.
 
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