Hi all – I have only recently joined the forum, and have found it to be a wealth of information… if anyone has any thoughts or help for me in my current situation that would be great….
I am in the process of purchasing our first IP. We currently have $135,000 in equity in our PPOR, and are using some of this equity to pay the 20% and costs on the IP. Purchase price of IP is $168,000 + costs around $175,000 (live in VIC). We are taking an 80% loan on this property.
I am with the Bendigo Bank – and have applied for the finance through them. However, they are wanting to cross-collateralize the loans. I did speak with the bank manager about alternatives to CC but he basically fobbed me off. I had briefly spoken with a Mortgage broker who suggested not to CC as this could affect future investing.
I am keen to purchase another IP in the near future, what would be the best way to finance this first deal? Should I perhaps use a different bank?
Any help would be much appreciated.
Jess
It may be worthwhile speaking with a mortgage broker to get their input on which lender to go with. They will be able to look at the different products available from a variety of lenders and find which best suits your circumstances. If you approach lots of different lenders yourself it will show on your credit rating history if you have been knocked back by a number of different lenders.
The bank manager is looking after the bank's interests, not yours. they want to have an overabundance of security to protect their own interests. More than likely the manager is not investing in property themself and has little idea or interest in how CC will affect your desire to invest in more than one IP.
Sonya
Thanks Sonya – appreciate your reply. I will take your advice and speak to a mortgage broker in detail – do you (or anyone else out there) have a broker you would recommend? I kind of got the idea that the bank manager didn't invest in property himself as he really didn't seem to know why I was even asking such a thing!
I am able to easily obtain the finance, with or without CC. Perhaps I could set up a Line of Credit on existing mortgage to pay for 20% and costs, then have separate loan for IP? Would that work?
Thanks again for your reply.
Cheers
JessJess, i have found Richard to be very helpful. he is obviously a property investor himself and is helping me to set up a trust for future IP purchases.
i have previously used a broker who sounds a bit like your bank manager, then found a great broker who has now moved into a different area of investments and financing. Now i am dealing with richard and he is very forthcoming with information and quick to get the ball rolling.cheers
Sonya
Hi Jess,
I have 3 properties with 3 different Lenders, and I like it that way.
The reason being is that I like the flexibility and hate getting a No for an answer.Working with 3 or more different Lenders allow me not to lock myself into only One Credit policy.
The latest exemple :out of my 3 Lenders one only would do business with me because I only have 3 months in a new job .
The other 2 would wait for me to be in my new job for 12 months( a long time for a keen investor).Depending on how aggresive you want to be or even a one of opportunity migh require a higher LVR than 80%, sometime 95%.All Lenders set their own LVR and again I like flexibility/ choice.
Also In a downturn, your portfolio is not as vulnerable for business if you spread with different lenders.
CC offers some advantages( Tax benefits) I believe that suits investors that are more conservative( LVR under 80%) or have a good size portfolio with already a few Lenders .
This is only my opinion and I hope it will help you make the right decision that suits you.Hi Jess,
I have 3 properties with 3 different Lenders, and I like it that way.
The reason being is that I like the flexibility and hate getting a No for an answer.Working with 3 or more different Lenders allow me not to lock myself into only One Credit policy.
The latest exemple :out of my 3 Lenders one only would do business with me because I only have 3 months in a new job .
The other 2 would wait for me to be in my new job for 12 months( a long time for a keen investor).Depending on how aggresive you want to be or even a one of opportunity migh require a higher LVR than 80%, sometime 95%.All Lenders set their own LVR and again I like flexibility/ choice.
Also In a downturn, your portfolio is not as vulnerable for business if you spread with different lenders.
CC offers some advantages( Tax benefits) I believe that suits investors that are more conservative( LVR under 80%) or have a good size portfolio with already a few Lenders .
This is only my opinion and I hope it will help you make the right decision that suits you.Hi Jess,
I’m new to investing also but thought I’d share our situation in case it can help you. We recently refinanced with CBA setting up two mortgages, one for our PPOR and one that represents the equity we have. We have already used a portion of it to buy our first IP, and have the remaining amount sitting there ready to use when needed. As this mortgage was set up for investing purposes the interest and fees etc are tax deductible. Obviously we aren’t paying interest on all of it until we use it, and the value keeps going up as we make repayments. So if you intend to buy more than one IP this might be suitable for you as the money is always there available to use. .
Hope this has helped!
HeatherHi Jess
Yes Bendigo would want to take all securities and wrap you up like a dogs dinner.
Why dont you look at taking our a line of credit or similar with Bendigo on your current property and using these funds to cover the 20% and acqusition costs for the new investment property purchase.
There are some excellent investor style loans out there at the moment without all the bells & whistles that maybe required with the average PPOR.
Several lenders at the moment are wiving application, valuation fees have a very competitive low rate and charge no ongoing costs at all.
An investors requirements can be totally different to those of a buyer using their principal place of residence as security.
Richard Taylor | Australia's leading private lender
Hi to all – thank you so much for your feedback and ideas. I'm glad that I asked as I had an uneasy feeling that I was going about this the wrong way…. now, my only problem is that I have already filled out an application form etc with the Bendigo for the loan. However it is not set in stone yet. But I do only have until the 23rd of this month to get finance sorted!
Richard – I'd love to chat to with you about all this (asap obviously!), I will email you directly.
Thanks to Sonya, Laurent and Heather also for your great feedback – this forum is wonderful!
Cheers
Jess
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