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Refinancing my portfolio

Discussion in 'Property Finance' started by fols, 14th Jul, 2015.

  1. fols

    fols Well-Known Member

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    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
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    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.
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Good rates though.
     
  4. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    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.
     
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  5. fols

    fols Well-Known Member

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    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.
     
  6. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    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 :)
     
  7. jpcashflow

    jpcashflow Well-Known Member Business Member

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    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 :)
     
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  8. kr11

    kr11 Well-Known Member

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    awesome rate. esp as it is a loc loan
     
  9. fols

    fols Well-Known Member

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    Thanks for the feedback everyone. Appreciate it
     
  10. Kael

    Kael Well-Known Member

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    Such good rates... I'm envious. Haha.
     
  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    nuts, but just my musings, so feel free to ignore like most do :)

    Concentration risk.............................. very much like heart disease. One doesnt know its coming, and in > 30 % of cases the first symptom is death.

    Not that it matters much per se, because people know it wont happen to them, whats funny is that WBC group is cannibalising its own business..........but thats quite normal now too.

    Best read the little gotcha clause for the WBC Equity Access loan............ something about "repayable on demand"


    ta
    rolf
     
  12. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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

    M-THIS Active Member

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

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    After a certain exposure approvals can no longer be done by normal assessors. Etc And the deal needs to go to credit every time

    More a problem with loans that have lmi but can also be an issue where you have simple loans 80 lvr but a few of them and you are rental reliant etc.

    Lots More case by case reasons

    TA

    Rol
     
  15. M-THIS

    M-THIS Active Member

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    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?
     
  16. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    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.
     
  17. M-THIS

    M-THIS Active Member

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    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?
     
  18. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I'll write something from a legal angle later.

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

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    fols and M-THIS like this.
  20. M-THIS

    M-THIS Active Member

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