All Topics / Finance / financing woes

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  • Profile photo of propertylearningpropertylearning
    Member
    @propertylearning
    Join Date: 2005
    Post Count: 11

    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!!!

    propertylearning

    Profile photo of Mobile MortgageMobile Mortgage
    Member
    @mobile-mortgage
    Join Date: 2003
    Post Count: 913

    Hi PL & welcome to the forum,
    I don’t see the point in refinancing to another lender for 80% when you require 90%, talk to a Broker and see if you can get 90% and have your portfolio uncrossed at the same time.

    I can’t comment on finance for the boarding house without the relevant info, but I suspect you may struggle to get above 80% for this.

    Regarding the auction next week, you will need to have your finance pre approved before you commence bidding, cheers.

    Regards
    Steven
    Mortgage Broker

    Mobile Mortgage Market
    Ph: 0402 483 216
    [email protected]
    http://www.mobilemortgagemarket.com.au

    PLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.

    Profile photo of propertylearningpropertylearning
    Member
    @propertylearning
    Join Date: 2005
    Post Count: 11

    Hi Steven,

    Thank you for you quick response. Yes, we seem to be caught here. Currently able to get the 80% on the boarding house, but can’t get the 90% on other two investment properties. Wondering why I can’t have both. Will take your advice and keep searching I think. Just seem to be running out of time.

    Is this normal to have to spend so much time with financing? I never expected this to be such a pain. Especially when I’m so green with it all.

    Propertylearning

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Seems like they have cross collateralised your loans again even tho you have separate mortgages. This should be avoided as it will slow you down. You will probably not get more than 80% LVR for the boarding house, and most would probably class it as commercial. You could get 90% LVRs on the refinances if you have the borrowing capacity, but you will have to pay LMI. Maybe you should talk to a broker as there may be other lenders out there who could lend you more, and the broker can make sure the loans are not crossed in any way.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Robbie BRobbie B
    Member
    @robbie-b
    Join Date: 2004
    Post Count: 2,493

    Personally, I would use two lenders. One for the residential properties and another for the boarding house. You are being done a huge favour with 80% LVR on the boarding house so snap that up. It is usually lower than this.

    90% refinance is available from various lenders. You seem to be having problems because you are trying to go direct. Let a broker stress about the details.

    TMA


    http://www.email4money.info
    Investor Links
    First Home Buyer Website


    Profile photo of propertylearningpropertylearning
    Member
    @propertylearning
    Join Date: 2005
    Post Count: 11

    Thanks for your comments.

    On asking, have been told that the 80% LVR on boarding house is conditional on having all properties and won’t do boarding house above 70%without other properties.

    Looking at alternatives for this finance now

    Propertylearning

    Profile photo of Mobile MortgageMobile Mortgage
    Member
    @mobile-mortgage
    Join Date: 2003
    Post Count: 913

    Hi PL
    I think you are doing the right thing by looking at alternative finance on the boarding house, you may only get 70% elsewhere but I believe under the circumstances you will be much better off in the long-term, Good luck, Cheers.

    Regards
    Steven
    Mortgage Broker

    Mobile Mortgage Market
    Ph: 0402 483 216
    [email protected]
    http://www.mobilemortgagemarket.com.au

    PLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.

    Profile photo of Robbie BRobbie B
    Member
    @robbie-b
    Join Date: 2004
    Post Count: 2,493

    I agree with Steve. It should be far better over the longer term.

    TMA


    http://www.email4money.info
    Investor Links
    First Home Buyer Website


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