Bank vs non-bank lending for investment and best comparison site?

Discussion in 'Investment Strategy' started by Lloyd, 26th Nov, 2019.

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  1. Lloyd

    Lloyd Member

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    Dear Property Gurus,

    I have 2 investment properties (units) and I am about to look at my refinancing options. This is because I want to improve my cashflow by:

    1. Getting more competitive loan rates.
    2. Recalculating my loans (since I'm ahead) and thus reducing P&I monthly payments.

    Please can I have your opinions on:

    1. Whether it is worth going to a bank or non-bank lender?
    2. What is the best investment loan comparison site?

    My current loans are variable P&I with an offset on the bigger loan. I would quite like to continue with this structure because I am slowly paying down my loan and reducing risk but could refinance in the future to suit life's challenges / opportunities.

    Many thanks,

    Lloyd
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    You need credit advice for your particular circumstances. Impossible to say
     
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  3. Lloyd

    Lloyd Member

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    Does this info help?

    Both units are worth about $1m each.

    Loans on each are $500k each.

    I am a top tax bracket earner who can service both units are they structured currently. P&I Variable.

    The advice I was hoping for was probably more general, i.e. is there any reason not to go with a non-bank lender?
     
  4. Brady

    Brady Well-Known Member

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    - the non-bank lender might be sold up and debt bought out by someone else
    - the rate could change
    - they could stop doing lending, no increase
    - offset might not actually be an offset
    - things change just because you can service now doesn't mean you can later

    Small read about it here... Non bank lenders - pros & cons
     
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  5. Lindsay_W

    Lindsay_W Well-Known Member

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    Why not speak to a broker who can give you the credit advice you need?
     
  6. Lloyd

    Lloyd Member

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    Thanks @Brady . Would this put you off though?
     
  7. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    As a mortgage broker I have access to bank and non-bank lenders. I'll take the proper bank lender any day of the week.

    Looking at a simple comparison initially the two might seem fairly similar overall. It's what happens later on that makes a difference, especially for investors. There's so many different things that occur that I'm not going to point any one thing out in particular, but in my experience it's a lot more common to regret dealing with a non-bank over a regular bank later on.
     
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  8. Brady

    Brady Well-Known Member

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    I work for a major bank so pretty biased... but in saying that when I was at the servicing wall (before rate cuts, assessment rate decreased along with paying down debt)
    I considered using non-bank lenders, but I was only prepared to do this based on short-term deals (reno/flip, development/splitters)

    My suggestion would be to speak with @Peter_Tersteeg
     
  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Or they might just sell their loan book and make you owe someone else. And then Jack up the rates.

    I favour Banks because unlikely you will be sold off and they are able to offer offsets.

    But it depends on what the rate difference is. Firstmac for example have some god gates ATM and could be a good choice for an investment property
     
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  10. Mark

    Mark Well-Known Member

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    It depends on your long term goals. If you are looking at building a large property portfolio, the rates become less important and loan structure becomes more critical to maximize borrowing. If you do not want to take on too much debt, smaller lenders probably can offer better rates since they do not have the services the big 4 have, bank branches, easy to use websites, multiple offset accounts etc.
     
    Whitecat likes this.