All Topics / Finance / How does one finance with several banks?

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  • Profile photo of impatientimpatient
    Member
    @impatient
    Join Date: 2006
    Post Count: 34

    I have heard from several sources now, comments about getting finance from several different lenders at the same time to keep borrowing to build your portfolio.
    My qu is: how the heck do you borrow more from a 2nd or 3rd bank, if bank no1 already says you’ve borrowed enough?? Am I missing something?[confused2]

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

    Each bank has different requirements and different methods of calculating serviceability. So it is possible and sometimes a good move to go to several banks.

    If you have everyone with one bank and they say ‘no more’ then you are stuck – especially if cross collateralised. It may be costly and difficult to resolve this.

    Terryw
    Discover Home Loans
    Parramatta
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    Profile photo of YoungInvestorYoungInvestor
    Participant
    @younginvestor
    Join Date: 2003
    Post Count: 377

    Another reason for perhaps being able to borrow more from banks 2 and 3 when bank number 1 says your at your limit is competition.

    Rival banks will often push their boundaries a little further if you are willing to bring over your existing loans from another bank.

    As Terry mentioned though, this can get expensive so do the sums on both and work out which is more beneficial.

    Steve.
    (YI)

    “Knowledge is Power”

    Profile photo of AnitamarshallAnitamarshall
    Participant
    @anitamarshall
    Join Date: 2005
    Post Count: 79

    I would recommend you use a broker because they will be able to advise you on the lender that best fits your needs, they will shop around for you and come back to you with a selection of lenders that will suit your needs. They will also submit the loan to the lender and do all the paperwork required to get the loan approved. This way you dont have to ring around yourself to find another lender from the wide variety we have available.

    Some lenders have what they call “maximum exposure” so will have a limit on how much you can borrow so it is important to look at that if you intend having several properties.

    Anita Marshall
    Advanced Finance Solutions
    http://www.advancefinance.com.au
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    Profile photo of THEHEATHTHEHEATH
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    @theheath
    Join Date: 2006
    Post Count: 27

    The banks are limiting their exposure. If you have borrowed 500k from bank X then they stand to lose 500k if you go under. If you want to borrow another 500k then bank X stands to lose 1million if you go under. So if you go to another bank for the second loan, bank Y , then each bank only faces losing 500k each instead of 1million. That is why another bank may be willing to lend to you when bank X has denied you the second loan. They are simply limiting their exposure to their potential losses.

    Profile photo of redwingredwing
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    @redwing
    Join Date: 2003
    Post Count: 2,733

    a lot will depend on your loan to valuation ratio and debt serviceability as well its not just a case of borrow borrow borrow..you have to be able to meet payments (in the eye’s of the banks)and you’d want to ensure that you dont overcommit

    Redwing

    “Money is a currency, like electricity and it requires momentum to make it Effective”

    Online Positive Cashflow and Renovating Calculators

    Profile photo of carlincarlin
    Participant
    @carlin
    Join Date: 2005
    Post Count: 211

    Hi there,

    We’re managed to cross-collaterise to the hilt with the one lender. Serviceability not an issue, but want to undo the knot we’ve tied. But only way to borrow from another lender with next property we buy(without swinging loans on current properties across) is to come up with sufficient deposit for a stand-alone loan.

    That’s what I find hard to work out. When people are setting up a different loan with a different bank just about every time they buy a new property, they clearly can’t access the equity in their existing properties because it’s tied to that lender. So where are they getting the money to make deposits??

    Carlin

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

    Carlin

    You can just increase an existing loan, take the extra money and use that as a deposit and borrow the rest from a different bank.

    Terryw
    Discover Home Loans
    Parramatta
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    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of carlincarlin
    Participant
    @carlin
    Join Date: 2005
    Post Count: 211

    Thanks Terry – but how do you approach a bank to ask them to lend you extra money on an existing investment property loan? And do they really not care that you plan to take this money to a different lender as a deposit on a different with them?

    I’m just not clear about the stages in all this.

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

    Carlin

    You just apply for a loan increase. Tell them it is for further investments. very simple. Some banks may only require a shorter application form to be filled out, depending on the amount. Many banks allow valuations to be done every 3 months.

    ANZ is a good bank for increases, under $100,000 it is only a 2 page app form, and they allow a valuation for free 3 times per year if you are on the breakfree package.

    Terryw
    Discover Home Loans
    Parramatta
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    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

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