financing woes

Currently we are with a large bank. We have always been with this bank and have had a good relationship. But we haven’t been money smart. We have been looking to refinance away from being cross-collateralised, whilst at the same time purchase another investment property (our third). The prospective new bank (another big one) will only give us 80% LVR on all properties (which is really not much of a benefit over our existing lender). I wanted 90% lends on the investment properties, but was told no-can-do. From the looks of other postings on this site, however, it seems that we can get a better deal on LVR? There is some security in having 80% lends in terms of risk which has been the position the bank has taken. However, this is stopping us from having the deposit for a fourth investment propery that we want to acquire (we feel that there is great future development/manufactured cash flow potential in this fourth property down the track). And we planned to then stop for a bit, take a breather and build up the bank balance and reduce loans. The second lender has basically said that we don’t have the deposit for this new property because we are using all our available equity on the 80% lends on other properties.
In addition, the new property we are buying is registered as a boarding house (individual room rentals), which they’ve agreed to loan 80% on (they’ve said that they are doing us a favour on this), but insist on this being a business loan facility – higher interest and lots of charges. Is this normal? Or is there an alternative to this too?

I’m not seeing much advantage at the moment in refinancing, except that the new bank has accepted our own valuation on our PPR (which is about 13% higher than our current lender) and will give us the money for the boarding house, albeit a business loan. In addition, it is enabling us to refinance another investment property at 10% higher than current lender. So, I guess there are a few advantages!

Anyone care to suggest (a) alternatives in financing the boarding house – have to exchange next week on this, (b) refininancing and where to go to get the 90% lends on the investment properties and (c) how do I get pre-approved finance for the property that I want to bid on at auction next week at this late stage (had given up on this on bank’s advice, but someone here might just be able to give me a solution I feel). Have considered credit cards/personal loans, etc to finance deposit, but need to borrow the remainder – approx $450,000-$500,000.

Finally, we have received all the new mortgage documents this afternoon to sign and see that all properties are going to be held as security over all loans. As we are setting up separate mortgages for each property and a LOC with our PPR as security with the additional equity (totally drawn on the 20% needed to fund each of the investment properties) I had thought that this would be avoided. Isn’t this cross-collateralisation just by another name? Any suggestions would be gratefully appreciated as we are totally stressed about all this money stuff. It’s enough to put you off and head for the share market!!!

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