Finance Structuring & Ownership Structuring - Guidelines

Discussion in 'Loans & Mortgage Brokers' started by clearskies, 27th Mar, 2021.

Join Australia's most dynamic and respected property investment community
  1. clearskies

    clearskies Member

    Joined:
    29th Jan, 2019
    Posts:
    21
    Location:
    Australia & Overseas
    Hi,

    I was wondering if anyone could share please what would be the key terms, elements and considerations when looking at LOAN/FINANCE STRUCTURING & OWNERSHIP STRUCTURING for an investment property portfolio? What things/terms are typically favourable or not, and carry certain risk or opportunity when looking to grow a portfolio?

    I've read up on a few threads about both, and like a lot of things, would be of course very dependent on individual circumstances and objectives, but was hoping to get a more general overview and general rules of thumb/guidelines (or pointed in the right direction) to better understand this area.

    Thank you.
     
  2. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,672
    Location:
    Australia wide
    I have written over 800 tips on this in the legal and tax sections of this forum. There is a link in my signature to the tax tips.
     
    Lindsay_W, craigc, Tony Xia and 2 others like this.
  3. clearskies

    clearskies Member

    Joined:
    29th Jan, 2019
    Posts:
    21
    Location:
    Australia & Overseas
    Thanks Terry. Those tips are great and I've had a read through a lot of them.

    I've heard recently a few people emphasizing their point that the 'interest rate' is rarely the most important thing to look for when building an investment portfolio, specifically in the structuring of your loan, so really looking to others to understand what terms/details are important?

    I imagine things like no cross-collateralization and being able to draw equity when required, but I imagine there's a lot more to it.

    Thanks
     
  4. clearskies

    clearskies Member

    Joined:
    29th Jan, 2019
    Posts:
    21
    Location:
    Australia & Overseas
    An example I've found, in order of priority:
    1. full disclosure of bank valuation of investment property
    2. interest-only loan
    3. non-collateralization of other property
    4. interest rate of loan
     
  5. Ross Forrester

    Ross Forrester Well-Known Member

    Joined:
    30th Oct, 2016
    Posts:
    2,085
    Location:
    Perth, Western Australia
    The interest rate is one of the most important things but not necessarily THE most important thing.

    the terms and conditions are, for some, more important. For some the protection of the family home is more important.

    Some clients will form a calendar of their loan renewal dates and forward plan the loans as they expire.

    so it really depends on where you are coming from. And using a smart finance broker is the first step in getting that understanding.
     
  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,599
    Location:
    Gold Coast (Australia Wide)
    like most of us, many of our clients have "Goldilocks" wants ( everything needs be just right).

    Thats not how the real world works, if you are servicing reliant, one needs to suck up the so so rates of high servicing lenders.

    If you are equity bound, then you need to use the lender that provides the highest val, or pay LMI

    If you have cooked your credit file, you need to use a lender that doesnt just auto score deals.

    When we ask those affected to rank their NEEDS over their wants, one usually gets a more useable outcome, since a great rate and no loan doesnt achieve their goals

    ta
    rolf
     
    craigc likes this.
  7. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,672
    Location:
    Australia wide
    It is not so much the product but the tax structuring side that is important.