Questions about refinancing 3 properties

HI All
I have mainly been just a long time reader of these forums as I wouldn't have much to add to the knowledge that is already here , so onto the question .
I have 3 properties that are with different banks at present . I would like to refinance as to build granny flats on the properties ( all western Sydney, all LVR at about 50%).
I"m on a modest income (70 ish) which is where a lot of my issues arise from .
No PPOR , no kids, no other debt
At the moment loans total 700k..... each house worth maybe 500k ( 2 at 950m sq) each. Looking for another 450k total, is this possible.
At the moment I have a Rams broker looking at what can be done ( just started out on this journey), I have asked that all 3 loans be stand alone, but 3 application fees , which is fine as I don't want them x-coll .
So what should I be looking for what kind of interest rate would I be looking at , what would others suggest I look at doing . I"m open to idea's , or even maybe who I should be talking too ?

Stuart

 

Hi Stuart,

You may be able to do this without refinancing to the one lender - in fact if servicing is an issue it may be preferable to keep them with different lenders.

Depending how much you need to build the granny flats, I would look at simply getting cash out of each property to fund them, that way there's no need to even mention the GF to the lender if your lender/s don't like them.

Of course, it all depends on what your servicing looks like and the rest of your scenario - but using different lenders will definitely help if you're doing all 3 simultaneously.

 

It appears your main concern is serviceability? The best person to figure this out is a broker who's familiar with fairly detailed investment scenarios. I'm not sure that a single lender is the right solution as you can usually extend serviceability by strategically taking advantage of lending policies across multiple lenders.

 

When my previous broker left the industry, I interviewed three brokers from 3 different firms. The Rams broker didn't really find any good deals, so I suggest you speak to at least one more broker.

 

A second opinion is in order. There are many different ways to skin the same cat.

 

Balance convenience and cost of a single lender vs long term goals and structuring benefits - this will determine what lenders to use for what properties.

A common mistake is to try consolidate all lending with a single lending, and in the process lock out the ability to release equity in the future to make further purchases, ending the investing journey significantly earlier than necessary. Pretty graphs which explain this better can be found here: Diversified Lending Structure (how to maximise your borrowing capacity)

 

Corey - you could just refinance. If you couldn't refinance then you wouldn't be able to access equity anyway.

 

That's not exactly showing much foresight though Terry. As I'm sure you know many of the lenders treatment of existing vs new debt means that if they decide to restructure their debts later with a refinance, it's going to be serviced at a far higher rate than existing - so the lenders would allow releases without issue, but wouldn't take on that equivalent amount of debt if new and being introduced to the lender.

The assumption of 'just being able to refinance' is a dangerous one, I've seem many a client sitting with poorly structured debts, x-coll'd etc which can no longer release equity because they assumed they would just refinance it later. If they'd set it right from the start, they would have still had the potential to grow their portfolios.

This also ignores LMI, (outside of the OP's scenario, but in general structured lending plans), where a 'just refinance later' attitude throws LMI credits to the wind at the first opportunity.

 

This applies for some cases, but not all.