Refinancing my portfolio

Hi all

Maybe one for the brokers. I am reviewing finance options for my portfolio. Currently have most of it with St George.

Broker has secured the following with Westpac.

4.08% on $200K PPOR debt and $1M LOC (for future deposits)

4.18% for existing IP loans of circa $3M.

I am currently on a rate of 4.35% with STG. All loans are variable/ IO / line of credit. LVRs all under 80%.

Appreciate any feedback on rate/ other

Cheers
fols

 

You'd have to really consider whether having everything with one lender is wise.

I'd also assume that is all x-coll, which is super-unwise, especially with a whole portfolio.

 

Good rates though.

 

About $4M in residential debt with a single lender. Clearly the benefit is competitive rates, but it's not good risk management. I suspect Westpac would give you similar rates for $2M in total lending and a second lender would match it. At least that way you've got some sort of firewall in the portfolio.

And if the properties are cross colalteralised, you're not just lacking a firewall, but it's been built on a foundation of kindling.

 

None of the loans would be crossed.

LOC would be used for deposits for next purchases with other lenders. At this stage my accumulation phase would be complete. Hence, I would not need access to more funds.

 

Rates ain't bad at all.

As Jess said, it is worth considering diversifying lenders so you're not stuck with one set of rules/concentration risk.

Having $1mil LOC set up positions you very nicely if the income is there to service loans for the deposits the LOC will cover

 

Your position is great and your rates are good.. maybe just start looking at another lender for your next property and start spreading the risk

 

awesome rate. esp as it is a loc loan

 

Thanks for the feedback everyone. Appreciate it

 

Such good rates... I'm envious. Haha.

 

I believe westpac's IO loan could be used like a LOC product - but with a term.

 

Can someone explain what the risk here is? I've got a few loans with same lender.

 

Given loans approved and they are simple (non X-Coll) 80% LVR there shouldnt be too many risks? Once loan contract issued they cannot cancel your mortgage if they have a change in internal policy right?

 

What about if your lender decides to make dramatic changes to policy, like AMP recently did? Suddenly your whole portfolio can be stuck, particularly if you've paid lmi or have fixed loans.

 

Thanks for the replies. I'm not aware of the issue with AMP, but assuming that my bank decided lending to my classification group is too risky/not profitable for them, they still wouldn't be able to take back their loans against my properties right as I have a standard 30 years I/O loan. Is there something I am missing?

 

I'll write something from a legal angle later.

Just imagine you can't pay one or more of your loans....

 

See a new thread of this: The risks of having large number/volume of loans with 1 lender

 

Excellent and informative post. Much appreciated Terry.

I guess its a mix of juggling this risk and gaining as much borrowing power as possible before moving to other lenders.