Same Lender for 3rd IP?

[bth]

Hi Guys

I will be looking for a 3rd IP and would like "any" advice on the following...

1)
Do I look elsewhere for my finance or stick with the CBA. I have 3 loans with them ( 1 PPOR and my 2 IPs ). I am seeing them this week and they see no problems whatsover in a loan for another IP. I suppose there will be a time when they say no more but do I carry on until that time or best to look elsewhere now.

2)
I have equity of 250K + in my investment properties and 100K in my PPOR
I want to borrow only aginst the IPs. Could I look at buying more than the one property now with this amount of equity rather than waiting another 12 months?
As prices have risen recently ( and should carry on to do so even if modestly ) I would like to try for perhaps another two

3)
I do not intend to buy anymore in my home suburb (where my two IPs are ) but now look futher afield in NSW or possibly the SE of QLD. Whilst I do not expect any 'tips' of upcoming hotspots what perhaps are now the states to avoid (if any) or to look at other than NSW / SE QLD

Thanks for any good advice
Barry

 

[bcoombs]

Hi Barry

Quite a number of questions.

1. CBA I would use them while you can and then use other lenders later. CBA are painful at the moment and you may not have them as an option later. However having said that CBA are not the cheapest lender either. If you have an investment plan sit down with an accountant and then your broker. You can then plan your future options and steps.

2. Same as question 2 the big variable is your salary, current rentals and future rental income. You can sit with a broker who can give you two scenarios and tell you if fits or not.

3. I think your best to start with http://www.yipmag.com.au/ The last few issues at the back it contains rental vacancy rates. There is also a section on growth rates. Also SE QLD has a few NRAS properties coming up. You can pm me if you want some info.

 

[brierleyg]

Hi Barry

From a risk perspective you would be far better spreading yourself around the various lenders. Send me a mesaage and I can have a look at your situation.

Thanks
Greg

 

[Rolf Latham]

Hiya

The only thing I would add is that I would raw equity to 80 % of current vals regardless if u will buy another propery.

Sort of has been alluded to, but id like to repeat the old adage of "borrow when u dont need it" comes in handy if market or personal conds change,

ta
rolf

 

[Thann]

Hi, just as a data point, our sit-rep

PPR, IP1 & 20%+costs for IP2 with one lender.
80% of IP2 with another lender (Homeside)

Plan is for IP3 to be with PPR lender, then IP4 to be the same setup as IP2.

Having a bunch of loans with the one lender let us have a discount on interest rates and other things.

 

[tess85]

Having a bunch of loans with the one lender let us have a discount on interest rates and other things.

Yep - and when you have a pro package, then you save quite a bit on loan application fees etc.

That said, we have 1 PPOR and 2 IPs with the same lender and we'd probably be looking at spreading our exposure to another lender as our total loans are close to $750k (upon the suggestion of our broker). Nothing magic about the number $750k, it's just we thought we'd diversify when we got to around that point.

 

[tobe]

Having a bunch of loans with one lender to get an interest rate discount is the worst reason to use the same lender.

a) in the scheme of things an interest rate discount isnt a big deal compared to the opportunity costs sometimes invoked through XColl, and inflexibility.

b) the interest rate discount brings the interest rate to approximately where you would be with a basic variable rate, so you could achieve similar interest rates with 3 basic variable loans as you could with a pro pack discount off the standard variable.

c) interest and other costs on an investment loan are tax deductable, so depending on your tax bracket, the interest rate discount is only as good as your highest tax rate. ie if you are paying 30cents in the dollar tax, the .7% discount is only worth .5% after tax.


Interest rate is the last thing to look for, and the first thing the bank tries to sell you when you approach them about lending. Funny that?

 

[Rob Williams]

Sort of has been alluded to, but id like to repeat the old adage of "borrow when u dont need it" comes in handy if market or personal conds change

I totally agree. By the time you actually "need" to borrow the money, you may not be able to due to personal circumstances or credit conditions.
I remember the old saying - to borrow money from a bank, first you have to prove you don't need it.

 

[brierleyg]

I like that old saying Rob - because it is so true.

 

[josko]

Having a bunch of loans with one lender to get an interest rate discount is the worst reason to use the same lender.

a) in the scheme of things an interest rate discount isnt a big deal compared to the opportunity costs sometimes invoked through XColl, and inflexibility.

b) the interest rate discount brings the interest rate to approximately where you would be with a basic variable rate, so you could achieve similar interest rates with 3 basic variable loans as you could with a pro pack discount off the standard variable.

c) interest and other costs on an investment loan are tax deductable, so depending on your tax bracket, the interest rate discount is only as good as your highest tax rate. ie if you are paying 30cents in the dollar tax, the .7% discount is only worth .5% after tax.


Interest rate is the last thing to look for, and the first thing the bank tries to sell you when you approach them about lending. Funny that?

Tobe, I agree.

Not to mention the fact that the banks are inconsistant with their rate rises. This week your CBA loan is in front but next week it could be your ANZ.

Personally, there is no way I would want one single bank holding my whole portfolio.

Tess, there is the magic number of 1mil though. As you are aware your next purchase will get you there.

I'm glad you are considering diversifying.

Barry, Welcome to the forum - we're practically neighbors!

Regards JO

 

[wobbycarly]

Tobe, I agree.

Not to mention the fact that the banks are inconsistant with their rate rises. This week your CBA loan is in front but next week it could be your ANZ.

Personally, there is no way I would want one single bank holding my whole portfolio.

Tess, there is the magic number of 1mil though. As you are aware your next purchase will get you there.

I'm glad you are considering diversifying.

Barry, Welcome to the forum - we're practically neighbors!

Regards JO

Jo,
Why do you say $1M is the "magic number"?
Thanks

 

[josko]

Hi wobbly,

Any exposure over 1mil to a bank puts you into a different level of lending.

Lenders (generally speaking) have a certain debt level that they will allow you. Once you get over the million dollar mark you have reached an exposure point to the bank that will be assessed with a little more diligence than if you were still under.

If you have your properties Cross-Securitised...watch out! Servicing at this level is restricitve.

Throwing LMI into the equation can also make matters worse. Mortgage Insurers keep a watch on a lenders exposure to one customer.

The higher the "risk" for the bank, the less they will lend you, therefore it would be better for Tess to source a loan elsewhere as she could find her one lender may not lend her as much as another.

Of course individual circumstances apply.

Regards JO

 

[Rolf Latham]

From a marketing point of view they like the 1 mill because then u become a special customer, and may get better rates etc

BUT.............as always, there is significant misalignment of marketing and front end, credit, funding and implemention. Would be good if they would talk to each other once in a while

ta
rolf

 

[RumpledElf]

We're actually in much the same position ... wanting a 3rd loan and we're with the CBA. We can come up with a 40% deposit without needing to refinance, just need to pull a small amount against an existing property unless we can find a lender who does completed-value construction loans.

CBA's $8 a month fee per loan is what annoys me most, it is %-wise a very high fee and they are quite inflexible with their MISA and other stuff. I'm sure some other bank has better products.

Catch is I'll have around $40k of non-deductable debt muddled up with deductable debt on one house if I don't go with CBA again, but I suppose any decent accountant can work their way around that one ... better than being cross collaterolised.

 

[wobbycarly]

Hi wobbly,

Any exposure over 1mil to a bank puts you into a different level of lending.

Lenders (generally speaking) have a certain debt level that they will allow you. Once you get over the million dollar mark you have reached an exposure point to the bank that will be assessed with a little more diligence than if you were still under.

If you have your properties Cross-Securitised...watch out! Servicing at this level is restricitve.

Throwing LMI into the equation can also make matters worse. Mortgage Insurers keep a watch on a lenders exposure to one customer.

The higher the "risk" for the bank, the less they will lend you, therefore it would be better for Tess to source a loan elsewhere as she could find her one lender may not lend her as much as another.

Of course individual circumstances apply.

Regards JO

Thanks. That explains a few things!! Wondered why our last one in June was so hard to get over the line (30+ days for finance!! )

We're in a mess with "everything" currently x-coll with everything else. But we've built up enough equity now that when we re-fi for the next one, we should at least have 3 places that can stand alone.

Oh well, I'll leave all that for the broker when the time comes!

 

[Rolf Latham]

Hiya

With a nick like Wobbly.............what do u expect when u have over a mill and u are crossed

ta
rolf

 

[wobbycarly]

Hiya

With a nick like Wobbly.............what do u expect when u have over a mill and u are crossed

ta
rolf

No 'L', Rolf But I appreciate the sentiment.