Hi everyone,I notice many of you work in the world of finance and wondered if you could explain to me what a financial broker and/or a mortgage broker offer in the way of service that is different to a bank? Also what charges are there to use your services?
I would be interested to hear from Richard and Terri especially as they are veteren forum contributers so have a sound knowledge in investing.
My partner and I are off to see the loans officer at our bank regarding our IP loans to check how they are linked etc. We want to loan more money without linking all the IPs.Thanks for any input.
DebbradHi both
The point you have raised is a very good question.
A Bank will give you an perspective on what they can offer in the way of product with little or no regards as to loan structure, type or any other financial plan or risk analysis.
This is usually because they lack knowledge of such areas and are more interested in securing the loan to build their figures and to ensure the Banks security is maintained.
A MB can sit on your side of the fence and hear what you are after and the goals and aspiration you set for you wealth creation and then devise a plan to move forward.
This could include suggestions on how you structure the loans, the entity in which you purchase them in and then ways to maximise your borrowings without X collaralising the loans.
In addition a financial planner can suggest ways you should protect your investment by looking at risk type products such as Term Life and Income Protection to name a couple.
I know both with Terry and I our services are entirely free as we are remunerated by the Bank or lender with whom we place the application.
With regards to the financial planning aspect I provide my risk services free of charge however do charge for the preparation of a complete financial plan where a client is looking for investment or superanuation advice.
I hope this helps a little but feel free to ask any further questions.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Hi Finance Wizz’s
I am also very interested in this topic. We have just started to organize finance with our bank for our first IP. They suggested we first talk to our accountant to find out his recommendation. He told us to take out a interest only loan for the full value of the IP, set up a seperate mortgage offset account (against PPOR) for the rent repayments as all interest from IP is tax deductable, whereas if we deduct our deposit from our existing home loan then that portion isn’t tax deductable. Our accountant said that worst case scenario the banks will find a way to take everything off you anyway. ??? We have just had a valuation of our PPOR for $315K and owe $75K, we work for ourselves (builders) so we can buy, renovate sell in short time frames without too much loss but would rather buy and hold long term with the properties that we feel will be off most long term benefit. What do you all think??[eh]Hi JFisher (Sorry i dont know you real name)
I think that is a niave attitude and not entirely legally correct.
Yes i would advocate borrowing the entire loan amount plus costs but the important factor is the way the loan is structured.
Imagin you have your own home and 4 IPS and through everything in together and then wish to sell your home and take out some of the profit you may well find that your Bank say NO we require some or all of these surplus funds to cover security on the other loans.
Alternatively imagine one of your IP’s is in arrears due to a poor tenant not making the rent payments and the Bank after taking legal action decide to sell your PPOR which is a waterfront home to re-cover their debt on a cross collaralised security.
What happens when you have available equity of $1M but the bank you have all these loans with tell you that you dont fit on their servicing scale. You are unable to utilise the equity and go elsewhere as they have all the securities tied together.
Each of the above examples happens every day of the week and the Banks are protected by the way their mortgages are secured.
Sensible structuring can avoid a lot of future issues and a good MB can sort out such problems.
I maybe slightly biased but i guess feedback from clients each and every day on the way that their loans have been put together by their own bank makes me very sinicle.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Thanks Richard, I didn’t take all he said for gospel hence my question. He is a bit more on the super side of the fence than the property side. Your rationale makes perfect sense to me Richard except for one thing I cannot understand. Will a bank let you borrow the full amount for an IP plus costs without additional security? I understand that the IP itself is security, but is that enough for lenders? Obviously there is a knack to it otherwise no-one would be able to accumulate more than a handful of properties.
I did ask if we could release the PPOR down the track (which wil incur a small fee) and the bank said yes. I suppose I would have to ask what criteria would allow us to release our PPOR from the IP loan to work out how quickly that could happen (maybe I’m naive now).
I have read one of Margaret Lomas books which placed great importance on making sure the finance and tax side of things is correctly structured which is why we haven’t quite finalized anything yet. Your advice and the advice of the many other finance wizz’s has been very helpful for me as I was beginning to tear my hair out?Regards
Julie Fisher
Daryl Fisher Homes
[email protected]Hi Daryl / Julie (Thats a lot better)
Couple of things to clarify:
1) No lender (sorry there is one but you would use them for this) will advance purchase price + costs (circa 106%) without additional security so thats where it is important to structure correctly.
2) Yes any Bank will tell you down the track they will release your security for a small fee but the problem comes if their LVR ratios are no as they want at the time.
Assume your portfolio has not rised in value as you would have expected then certainly irrespective of what they tell you now they will not release your PPOR without LMI or indeed asking for a cash deposit to reduce your over liability.
The other issue of course comes with your borrowing capacity especially being self employed. As all lenders use different servcieability models you could easily find that you have reached your ceiling with one lender and want the flexibility of going elsewhere.
That may not be possible without much undue stress,aggrevation and cost.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Hi Richard,
Now that you have sorted that out for me (and anyone else reading), would you now advise me to go and see a financial advisor and get advice on how to set up correctly and then see a mortgage broker to compare finance deals? Obviously there is some benefit by not having all your IP’s financed through one property. I always thought that a bit of loyalty given to the banks would earn a bit of loyalty back (yes, I know, it even sounded weird as I was saying it[withstupid]). I don’t want to get the banks off side for our mainstream business reasons. We are in Mildura (Vic). If you are able to help I would be happy to send you whatever info you need. Just email me at address below and we can discuss it further if you have time.Regards.
Julie Fisher
Daryl Fisher Homes
[email protected]Hi Julie
Duly emailed.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
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