Hello all, I am relatively new to the forums and yes I have applied to have my username will soon be changed for putting a commercial name in there-my mistake there for not properly reading the rules Anyhow this thread is for personal reasons. I am looking to buy 3 specific small investment properties in TAS and I am very much a novice on mortgages (never had one). One would be small P&I, another the full property value at P&I and the final one IO. From my reading so long as the total loan amount is well within my income levels a mortgage provider will allow this? Also I am Melbourne based, and I wanted to know everyone's opinion on buying interstate/mortgage broking interstate: am I better to use a Melbourne broker solely for Melbourne and a Hobart broker for Hobart? Or, one sole Melbourne broker for anywhere in Australia? Or, does location completely not matter? Sponge me up please, I want to learn! Cheers.
Hi Henry, You can use which ever broker you like - they don't need to be local. Most of my clients aren't local to me, and most of the brokers on the forum are happy to work long distance. I'm interested to hear why you need the structure you've mentioned? A 100% lend usually indicates cross secured loans which we don't tend to do due to the inherent risks. That said, the same outcome can be achieved by structuring things in a different way.
Welcome to the forum. You don't need a broker to be in the same state as the property you're buying in nor in the same state as where you are. A more important part of the relationship is that you can communicate well with them and they can assist you along your journey in regards to reaching your goals. You have mentioned 3 properties with 2 different repayment types (P&I, IO) and varying LVRs. Is there a specific reason for this? Or did you read about something like this somewhere? An investment savvy broker will know how to structure the loans which will suit you best & also in a useful way to ensure you don't get trapped.
Thank you one and all for your replies. I am very much am the novice because haven't heard of the 'cross-colaterizing' aspect of all this. But did some research and from what you are saying I would be smarter splitting my deposit three ways and having three standout loans? The reason I wanted to put my deposit into just one though was that I could pay off the first loan pretty quickly (a year or so). I want 3 properties more based on the location, I could do the same total (3 combined) loan amount on just one property in another location but I believe this location best helps my goals. As to the P&I and I structuring=I have analysed this based on cashflow and also based on how long I want to hold each for. One question I probably wasn't clear on though, is a mortgage provider likely to be reluctant to lend me money to buy three properties right away if these are my first purchases-based on lack of investing experience/credit history? Or is it actually more got to do with simply the loan amount and what I am buying. One final question, the TAS market often favours speed, as in quick settlement periods can get you a property at a reduced price. My family friend used a Melbourne mortgage broker for his VIC home but his criticism was he was quite slow. Is there any way to tell the speed of a broker? Thank you.
welcome to PC @HenryF-ClientBestInterest good move to get started in property investing. reading from your posts, seems you are asking 2 different topics: 1. finance, re brokers, location does not matter, many brokers on PC are happy to work with interstate clients. no issue there. re the structure of loans, it is pretty important to set it up correctly in the beginning, no Xcross at all. combination of PI & IO is not a bad idea to control/management cashflow while building your portfolio. but after the APRA changes, it becomes a bit tricky, need to have long term view. re the "speed" of brokers, it will depends on how complicate your finance situation is, how well / quick you can prepare your supporting documents, which lender to use, how well organised the chosen broker is. 2. property selecitons, there is a thread re Tas, have a good read of, lots of helpful info there. happy investing.
Location doesn't matter. Find a good broker you connect with and they'll be able to write loans for any property you purchase. Plenty of good ones around this forum. Cheers Jamie
I hate to disagree with the above. But I do really believe that being able to meet face-to-face, especially for a novice buyer is huge. A good broker should be helping you with so much than just getting the loan, but also steering you through what you don't know that you don't know and that's just difficult to do on a video/phone call.
well, face to face is one of many communications strategies, Skype, WhatApp, Messager, WeChat... these are multi media, can do video calls, share documents, (share screens with Skype). getting on the phone, talking through things step by step does not require face to face,
Thank you all for your replies has been very helpful. I suppose one question that I don't think anyone has yet answered is the one on whether a mortgage lender would actually allow me to take out loans on 3 investment properties in one year considering I have nil experience, nor real mortgage credit history. Am I being fanciful? Thanks!
Has nothing to do with experience or good/no history. A *lot* do with serviceability and bad history. The Y-man
Possbily Mostly comes down to your borrowing capacity and how much you can contribute towards the deposit/costs on each. Cheers Jamie
Righto, but I take it a mortgage broker can start the conversation with a mortgage lender for me yes on realistic chances? Does my analysis of 4% P&I and 4.8% IO seem fanciful too given the other cirumstances?
And one final question, am I right in saying that if you end an interest only loan early-i.e. sell the property say in 3 years time, you only have to pay the principal back and any repayments up until settlement? Therefore is interest only a better investment option if you don't plan on holding the proeprty for very long?
You pay back what is owed on the loan, plus any outstanding interest that will be calculated on settlement, plus any possible fees, Yes. IO isn't necessarily 'better' for a short term hold. It depends on what you are doing, and if you have any non-deductible debt. P&I would see lower rates. Depends on your cash flow.
