Loan structuring - first property (IP)

Discussion in 'Property Finance' started by househuntn, 13th May, 2016.

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

    househuntn Well-Known Member

    26th Apr, 2016
    I'm about to get my first property which is going to be an IP. I've arranged pre-approval (IO, split between fixed/variable so I can have an offset account - which has been recommended on this forum.)

    I will be doing this all on my own (ie not using parents property) so I will be paying a deposit. I've read the borrowing 105% tip but don't quite understand it.

    The question is - looking ahead, regarding getting a loan for future properties, is there an ideal loan structure - which lender to use, or any other factors to consider? I read somewhere that the first lender should be the "most difficult" one to get a loan from, and then subsequently choose more "lenient" lenders (instead of doing it the other way where one might hit a brick wall with a "strict" lender)
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    18th Jun, 2015
    Canberra, Brisbane and Sunshine Coast
    Do you have a broker that can help you with this? Or are you going down the DIY path?


  3. George Poullos

    George Poullos Finance Strategist Business Member

    24th Jun, 2015
    This is exactly what a good broker can help you with. @Terry_w has written a tip about his ideal loan structure.

    Terryw’s Ideal Loan Structure

    This can used as a great guide. But regarding the other questions you have about which lender to use and when, this is why a good broker is so valuable. There is no quick answer to that question. It depends on many variables and also these are constantly changing in line with the tightening in the current lending environment.
    Terry_w likes this.
  4. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    18th Jun, 2015
    Melbourne, Nationwide
    Finance strategy isn't as simply as following a script and connecting the dots. There is no generic answer to what's being asked, it needs to be taylored to the individuals circumstances. It's also not so much about the ideal loan structure (that's fairly trivial), but more about strategic placement with the right lender at the right point.

    In a few years time the property with the most equity available is likely to be the first one you bought. If you started with a very strict lender, chances are you'll no longer qualify to access the equity with that lender and you'll have cornered yourself. Sometimes its easy to refinance, but quite often it would be extremely costly, especially if you're trying to aggressively build a portfolio. Starting with the most difficult and going upwards to the more lenient lenders tends to be the advice from fairly inexperienced brokers.

    A better stategy is to understand which 2-3 lenders are going to be the top performing lenders for your circumstances over time. Understand where the road blocks are to help you navigate them. Ignore the stricter lenders completely...

    ...and get advice from a broker who has the experience to understand the long term implications.