I am having to set up a new bank a/c. Although I favour using mortgage brokers for loans, are there any benefits of choosing the right bank? For example for multiple purchases would you stick to just one source, or try to spread your loans amongst several banks, etc? If it is just one source then it would be better if it was the best.
I’m not qualified to answer your question in any real depth… the only thing I’d suggest is talk to your broker about it. They’ll have good advice…
How do you define the best anyway? I have 5 loans with Bank of Melb, one with Commonwealth… my broker reckons as I go along we should spread them around. He did tell me why, but I can’t recall off the top of my head.
Cheers
rThanks “R”.
I shall be seeing my broker later this week.
It’s my understanding that the reason you’d spread your loans between different banks is so that whenever you go asking for another loan the bank doesn’t have to revalue your entire portfolio of properties.
I may be entirely mistaken here, but it’s something I was told by a “property investing accountant” on the Sunshine Coast.
Hi Longinthetooth,[8D]
You are more secure if you,[
]
1. Seek a bank which gives you a written valuation
for an intended purchase, as it ensures that you are paying fair market price.Take note that bank valuations can be 10% below market price.
2. Avoid cross colaterilzation [is there a spellcheck on this].It is safer to have your own home financed with one bank and your investments with another.This avoids losing your home if things go sour, eg illness,losing income ect.Bryce Inglis
[email protected]
http://www.ipal.com.auHi folks,
The key reason for spreading your loans around is the ‘safety margin’ lenders apply to their own securities.
Eg Loan 1 with ANZ at 6%, repayments $1000 per month. If you want to take Loan 2 with ANZ as well at 6% for another $1,000 per month, putting down 20% deposit from equity in property one (but not cross-collaterising!), they will assess your repayment commitments to Loan 1 and Loan 2 at 8% (ie 2% safety margin over their securites) making theoretical repayments about $1,250 per month each, and assess your ability to service the loans at this higher interest rate, therefore significantly lowering the amount they will lend you.
However, if you take Loan 2 with Commonwealth Bank for example, they will look at Loan 1 as a $1,000 per month commitment only, thereby increasing the amount you can borrow for Loan 2.
Make sense? [
]
MelIf you have a lot of loans with one bank, then you have something to bargin with. You can ask for discounts etc. If they stuff you around, then ask for a payout figure and see how quickly things change.
But I generally prefer to have loans spread out. Different banks have different serviceability calculations anyway, so you can often qualfiy for more with one bank at one time, but then when your circumstances change you may be able to get more from antoher bank etc. And the banks products etc are always changing, so the best bank today may not be the best tomorrow.
Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
All my loans, 8 properties to date are with CBA.
Reasons:
I’ve looked at other lines of credit and they offer no advantages over my current loan.
I am a gold member, this means discounts and prefered treatment.
I have a personal lender, who knows our assettts and financial situation very well.
I have seen mortgage brokers here and there, but the time and compliance cost (huge pile of paper work)of changing is to me not worth while.Regina,
Totally agree with you. My situation is the same, except I use the ANZ. Setting up a relationship with an individual at the bank that knows my situation makes life a lot easier for me.
I would change banks if the bank no longer supported the product I was after or their quality of service reduced. After all, I am the cutomer.
The other posts have got me thinking though …
D
]
]
The topic ‘Choosing a bank?’ is closed to new replies.
