Finance for IP number 3

I have my first 2 IP loans with reduce home loans (both offset, 3.84%, slightly negatively geared)
I’m hoping to buy 2 more IPs this year before negative gearging risks the chop (by sepearately refinancing the first two IPs)
Should I spread my IPs across different lenders? Reduce is cheap but there are high exit and refinance fees.
Also when would I start to consider other finance structures e.g. SMSF

 

What's the LVR?
Rate should rarely be a deciding factor
SMSF is not a finance structure

 

Depends on a number of things and the major one especially these days is borrowing capacity. For most people this dictates what lenders they use and what stages in their property purchase plan.

Once you purchase more and more properties - interest rate becomes less important and strength your borrowing capacity becomes more important. That and other policy/product specific niches such as cash out policy, debt recycling, etc.

 

They’re both around 80% based on previous valuations and the plan is to refinance up to 80% on current valuations to buy IPs 3 and 4

 

Thanks for your reply Rolf. You are correct - I'm reliant on equity in existing IPs so valuation is crucial. Reduce/mortgage ezy charge $250 for the valuation up front to tie the borrower in from the start.
Another issue is mortgage ezy charge $1000 to access the equity - not sure if this is a standard cost.
Given my plan is to keep going on this journey (5+ IPs) I clearly need to get a bit more savvy at this point and can't just be lured in by low rates (although clearly that is also a factor).
I'm keen to engage a mortgage broker but a bit overwhelmed by all the options.

 

Rolf is a broker I have used for many many years - and highly recommend - just beware that dry humour

 

Hi Becky,
Do you have a PPOR currently or are you renting? If you're renting, and you believe you eventually will want to buy a home, planning out your purchases is going to be really important. The last thing you want to do is achieve your 5 IP's, only to find there's no capacity to buy a home at the end of it.

 

this is often a problem with investors AFTER they picked a lender /lenders without knowing what problems they may have with these types of lenders. but if it is done, it is done.

have a chat with brokers on the forum, I am sure many of us can help you with it.

and welcome to PC @Becky

 

this is such a common issue with the strategy of "rent-invest", when ppl realise they need to buy their PPOR, they need either increase their income SIGNIFICANTLY or reduce their debts significantly ( by selling part of the portfolio)