Hi all, most of you probably read my gripe about ING Bank not lending us any more money!!!
Well now I have a question for all you investors who have 4 or more properties.
Is it best to have an all round Portfolio Loan or is it best to have each property on a stand alone loan with each under a different lender?Thanks, Sue L.
Susie,
I have a couple of properties tied up with my own home in a portfolio loan and another couple stand alone. My prefered option from here on is to set up stand alone using the undrawn funds from the portfolio as deposits. Reason being that if you purchase a new property and try to add it into the portfolio “all” portfolio properties have to be revalued. Now having your properties revalued is not such a bad thing but every time you add or subtract a property from the portfolio it affects the balance of the equity., thus making transactions more difficult. Also using a portfolio keeps all the risk against my owm home. My morgage broker said to me that even if I set up stand alone with the same bank they will hord all the security to protect themselves any way, that is the nature of a bank.My preference is stand alone with a different financial institution.
MJKSusie, u will find your accountant will love you if you keep them separate
]Accounting issues are taken care of by the use of sub accounts within the portfolio loan. One loan / multiple sub accounts. Each sub account gets its own monthly statement if you,ve got the right product that is.Each sub account can be P/I or interest only and rates can be fixed or variable within each sub account.
MJK
Susie
From my experience, portfolio loans are/were not the way to go. The Bank cross-collateralised the mortgages over the properties securing the portfolio loan. I unwound them all so that each IP has a stand alone mortgage and there is no cross collateralisation over the properties.
Majority of Mortgages today are “all monies Mortgages” anyway, so if you have multiple properties mortgaged with the same lender the all monies clause gives the Bank the right to collect all monies owing to it if you default under one Mortgage.
Hope this is helpfulCheers
Nessie[
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Cheers big ears for everyone’s replies.All points will be gratefully noted.
Sue’s.
SusieFrom my experience, portfolio loans are/were not the way to go. The Bank cross-collateralised the mortgages over the properties securing the portfolio loan. I unwound them all so that each IP has a stand alone mortgage and there is no cross collateralisation over the properties.
Majority of Mortgages today are “all monies Mortgages” anyway, so if you have multiple properties mortgaged with the same lender the all monies clause gives the Bank the right to collect all monies owing to it if you default under one Mortgage.
Hope this is helpfulCheers
Nessie
Nessie, havn’t you just argued against your own point? Or, are you saying that you should source a loan from a different lender each time?Hi Susie,
In my experience it is best to have your properties as stand alone. I have five stand alone properties with the same lender, all were 5%dep.With this lender if you have five loans they waiver the application fee on all and charge a flat $295 per annum.That is , no account fees or charges etc on all five loans plus a lot of other benefits. My point being ,do your homework , get an excellent broker and make the banks bid for your business.Be wary of a lender who insists that they need more than one property to secure the loan.
Hope this helps.
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