Finance

Hi Boysie,

I recommend you speak to a property savvy broker before you do anything and discuss with them what you want to achieve.

This discussion will allow you, with the assistance and guidance of your broker, to set your finances in order at the beginning, thereby reducing costs (and hassles) further along the way.

As an example our preinvestment days bank had one of the worse lending policies for my situation. As a result we transfered our accounts to another bank at a cheaper cost then than we woould have incurred later on our investment journey.

At the same time we set up line of credit accounts and use the line of credit for deposits and costs which allows us to go wherever we can/want for funds and ensures all our properties are not cross collateralised.

As such our property loans are spread across three institutions and if necessary we can touch base with more lenders as we progress further along our investment journey.

Derek

[email protected]

If you say someone is savvy you mean they really understand whatever the subject matter happens to be. In this case I was referring to a savvy mortgage broker who knows more about financing than just being able to sell a product. A savvy broker (like a savvy accountant) will help you get the structure right in the beginning – their knowledge and assistance can turn a rough ride into a smooth one.

A line of credit (also referred to as an equity loan)is best explained as follows.

Assume you own a property valued at $400K with a mortgage of $200.

Banks will lend 80% of this property (Ie $320K) less the existing debt of $200K which gives you additional borrowings of $120K.

This $120K can set up in a line of credit and is readily accessible to you as you are ‘approved’ to this amount – no questions asked.

Now assume you find an IP valued at $200K – you can now go to another lender, figuratively write a cheque for $40K + costs and then borrow the remaining $160K.

Derek

[email protected]

Boysie,

I recommend keeping it simple. After a few loans, the bank knows you well, you know the staff and will probably build up a rapport with the manager or loans officer. They will come to understand your goals (especially if you tell them) and see you as an excellent customer.

In the end I think this is worth getting a slightly more costly deal, if necessary. You will also owe so much money that you will qualify for a package (often called “professional packages”) which we entitle you to some discounts (eg0.6% on int rate) and some freebies etc.

TC

I used the same lender all my life because all I need now is a phone call to get loan ie. approve/not approve.

When this lender don’t want to lend me anymore money then I will go some where else.

Warm Regards

ChanDollars
[Keep going, you’re on your way to Frolic Freedom!]

I didnt elaborate in my first post, but like Chan and others, for me I do all my loans with the one bank manager over the phone, as I buy properties over the phone and fax.

My bank manager knows me and where I am heading. He bent the rules by thinking and acting laterally. All he is interested in doing is making sure I can service the loans at the end of the day.

I qualified ages ago for a professional package and I have to say he advises me along the way, not just taking money. I get a discunted rate. Now this may not appeal to everyone. But having my history with one person, saves me both time, costs and alleviates the dramas of the need to please explains….

When he stops assisting me, and when I reach my limit (if ever) then I will go elsewhere.

Mortgage brokers couldnt help me when I first started, despite property and equity and job income etc etc etc…I see no reason to change, the person that got me the help when all others failed, was this bank manager….if you are onto a good thing, stick with it!

Oh and I never deal with staff, I deal solely with him. Direct lines to his mobile and if he cant answer, he calls me back! (that day)

So consider your options and make your decisions based on your circumstances

Elves