Big Four or Alternative Lenders?

Hey Jayden,

Stepping back a bit – choosing the right loan is dependent on the property you’re looking to buy, the strategy for it and your greater long term plans.

You’ve said this is for an owner occupier loan – are you looking to invest in the future? Turn this property in the future as an investment property? Renovate, develop – anything out of the norm?

These variable highly influence what is the right pathway for getting the right finance structure. There’s no point just looking at the interest rate – as that’s only one factor of a loan. Otherwise its like picking a car purely based on the cost – you might end up with a Hyundai Getz when you need something to tow a boat!

King wrote:

Thanks Corey, very interesting.
It will be a PPoR at the time of purchase, but it is ultimately an investment and I will be looking to add value and/or refinance in the future to fund my second property (which will ultimately be another investment).
I understand the concepts of offsets/redraws, P&I, split loans, etc. – what other features or types of loans should I need to be considering in my research?
Thanks again

That helps.

Re; the offsets, repayment types etc – that’s all pretty basic features that just about all lenders offer- which isn’t what you want to try to compare (because face it, they all offer it- it’s not a point of difference).

The key is to compare based on lender lending policies – by using the right lenders at the right time you can significantly extend your ability to borrow to invest, release equity etc. Not all lenders were created equal and you can find yourself backed into a corner by using the wrong lender when it comes time to releasing equity, buying further property, changing repayment types etc. I’ve written a bit about this here: http://www.precisionfunding.com.au/diversified-lending-structure/

If you do it right – you should be able to still have a competitive interest rate with an investor friendly lender which will allow you to be able to draw equity from any renovation gains, borrow further and be able debt recycle etc in the future should you wish without having to pay refinance constantly/pay excessive fees over the long term.

Good thinking – let us know how you go!