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should i borrow from same bank

Discussion in 'General Property Chat' started by darrelj, 12th Mar, 2016.

  1. darrelj

    darrelj Member

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    I already have my IP and also my present home loans through Westpac. I am wandering if it will be possible to borrow for my next IP from another bank (Commonwealth) or should i stick to the same bank.
    Will i have to direct my wages to com bank when i already do it with westpac?
    Will the process of approval be difficult when a second bank is involved?
     
  2. wombat777

    wombat777 Well-Known Member Premium Member

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    Do you use a good broker?

    Once you start to have multiple loans with different lenders, the serviceability calculations get more and more complicated. The banks use different formulas. You should really be using broker advice relating to how to structure your finances so that you maximise your borrowing power.
     
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  3. JacM

    JacM VIC Buyer's Agent Business Member

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    You can direct your wages wherever you like. I agree - consult a good broker. There are some great brokers on these forums such as those listed below.

    Richard Taylor

    Peter_Tersteeg

    Rolf Latham
     
  4. darrelj

    darrelj Member

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    Do i need a broker from my own state? Tasmania.
    Never tried brokers, but how expensive it would be.
     
  5. dabbler

    dabbler Well-Known Member

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    No & cheaper most likely....
     
  6. Santaslayer

    Santaslayer Well-Known Member

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    Most don't charge upfront fees but will take trailing commissions from the financer
     
  7. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Nope. Brokers can do their thing from anywhere with an internet connection - I have clients all over Australia (and beyond) and it's the same story for most of us. You'll find the majority of investors on this forum use the best broker they could find, rather than the closest :)

    As @Santaslayer said, very few brokers charge any fees for their service.
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Borrowing from the same bank has its advantages, which included greater potential for discounts, easier administration (one internet log in for example), but there are also disadvantages with the main one being asset protection - all monies clause and risk if you start to get wobbly - you will fall over faster.
     
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  9. Simon Moore

    Simon Moore Mortgage Broker - Melbourne Business Member

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    If you are trying to maximise borrowing power, some lenders will use actual repayments + an interest rate buffer, instead of their assessment rate (normally 7.25% - 7.5%) when calculating serviceability on home lending not being refinanced. It can end up being a fair amount extra.

    I would recommend you talking to a broker, they can have a proper look and sort it out for you :)
     
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  10. bob shovel

    bob shovel Well-Known Member

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    You can get good rates and /or deals using the same bank but over time you may struggle. Using a broker can make dreams come true ;) (you like one brokers :))
    They'll look at your goals and work on a plan to get you where you want to go and also USE the banks to your advantage! The banks all play the game differently and brokers can make sure you're playing it to
     
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  11. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    One of the main problems you'll find going direct to the bank for all your loans is that they'll structure your loans completely wrong. They will cross-collateralise all your properties which can be a nightmare down the track and depending what they do can also jeopardize your tax deductions.

    It's very easy and usually free to get your loans done via a broker, and if they know what they're doing you'll end up in a much better position long term.

    A less skilled broker will do just as much damage as going direct to your bank, so read the forums and get an idea of the questions to ask when you chat to one. Your broker does not need to be in Tassie, we can do everything via phone/email/skype.
     
  12. RumpledElf

    RumpledElf Well-Known Member

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    They don't automatically xcoll, I've got all mine separate and just saved the deposit up for each one. But then I'm one of those savings type people, I have plans at the moment to build a PPoR in cash.

    The guy I deal with at the bank is great. I'm planning to buy one more property in the next 3 years probably joint with someone else and its nice that he has all my stuff on file.

    I got my last loan application audited and they nitpicked all my transactions and he explained them all away for me.
     
  13. Omnidragon

    Omnidragon Well-Known Member

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    Ok to do so, as long as you know the pitfalls (e cross collateralise), am on top of the market etc.

    Lots of brokers are on this forum and I agree a broker can help on structuring etc.

    But like all things many brokers are also be pretty self-serving (of course there are good ones too) and often can't even beat the terms I get when we're going for the same bank. The bank you use is best example - no broker I've ever heard can come anywhere near terms Ive gotten. On another thread a broker spoke of going to the State Manager (whatever that is) and the manager said there's no way my deals exist.

    Problem with going to a broker therefore is without knowing who's good, you'll probably get as bad a product as doing it yourself.
     
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  14. Barny

    Barny Well-Known Member

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    can your serviceability hit a limit through only one lender, regardless of how much security you have?
    @Jess Peletier
     
  15. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Back to the original question of keeping loans with a single bank vs diversifying, it really depends on a number of elements.

    Having several properties with a single lender increases the amount you borrow with that lender. This will often give you some negotiating power to get cheaper rate. Right now if you're comparing CBA to Westpac, this isn't relevant (CBA is taking Westpac to the cleaners), but the market at the time of writing is a bit unusual. Often it's reasonable to have 2-3 properties with a single lender.

    You can also over expose yourself to a single lender. The affordability models both the CBA and Westpac use become quite conservative after the seond or third property. The reason to use a different lender at a future point simply because your current lender won't give you the money can be quite compelling.

    There's good argument that after about $1M to $1.5M a single lender will create road blocks in some circumstances, even if affordability isn't an issue. I've helped clients build $5M+ portfolios across 3-5 different lenders. Had they used a single lender, they would have hit the brakes at $2M.

    The right answer really depends on the individual circumstances. For some people diversification will take them further, for others staying with the right lender (which honestly I doubt is CBA or Westpac regardless of how good the rates are) will allow them to build a larger portfolio.
     
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  16. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Absolutely. Lenders use different modelling so the amount they'll lend varies significantly and is dependant on a number of variables.

    Even if your serviceability is strong with a particular lender, they may be restricted by mortgage insurance which will have it's own set of rules behind the scenes, especially when the LVR is above 80% and you've already borrowed a significant amount.
     
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  17. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Yes, absolutely. All their servicing calculators are different and it's based on income and expenditure, not assets.
     
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  18. Barny

    Barny Well-Known Member

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    Thanks @Jess Peletier and @Peter_Tersteeg. I was schooled on this yesterday. I always assumed the more security I gave, and the bigger the amount of borrowings would reward a better deal.
    Cheers
     
  19. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    It can impact rate - lower LVr's tend to get better rates, but not servicing unfortunately!
     
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  20. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    It does help, but only to a point. There's only so much in discounts the can give.

    I've already mentioned that diversifying might help your affordability. There's also an argument that you can over-expose yourself to a single lender.

    There's no perfect answer to this question, and the best answer for one person will be quite different for another.
     
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