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Splitting lending across different banks

This is a practice that we're starting to see recommended much more now by experienced investors, accountants and the like.  But what benefits does it have and how does it work in practice?

I had a prime example recently where a client benefited from lending at two different banks.  They wanted to top up their mortgage to buy a new car.  A simple $20K transaction, or so you would think.

They owned their own home worth $500K.  With a mortgage of $350K.  They also owned a rental property worth $400K and a mortgage of $320K.  This put their overall LVR at 74%... no worries there to top up, right?  

But if they had both of these properties at one bank they would be restricted to 80% lending on their own home and 65% on their rental property.  A total of only $660K, less than their $670K they currently have.  

But because we had the foresight to split their lending a number of years ago it meant we could top up their lending against their home mortgage to bring that specific property to 74%, even though their rental was at 80% which is over the current LVR limit imposed by the Reserve Bank.


LVR impacts are one thing to be weary of, but what about policy changes?  We had one bank recently who insisted they would no longer give mortgage holidays and another who insisted on higher rates for rental properties.  What's next?  A bank could easily change a policy to effect you and if you don't have the flexibility of another bank option then you might just be stuck missing out on an opportunity simply because everything is tied up.

But what about the simplicity of having everything under one roof?  

That's where we come in.  We're 100% committed to ensuring you're getting the best home loan options and advice ongoing but we simply don't have a preference as to which lender that is with.  

This allows us to give you the best balance of products to suit you, rather than just what one lender is offering at the time.  It keeps you with flexibility but at the same time gives you the simplicity of knowing that you're simply executing a plan.

You can keep your day to day banking at one lender and simply have an automatic payment going out to other banks if you wish.  The ease of internet banking!


Obviously this is not the right choice for everyone but we believe in giving the best advice to get the best out of your personal situation.

So if you're lumped with one bank and are interested to see whether some flexibility of another lender could help to improve your finances or reduce some risk then we'd love to chat.

Feel free to click the "contact us" tab on the top right hand side and flick us an email to office@mymortgage.co.nz 

If this interested you then it would definitely be worth reading our blog on the impacts of the LVR restrictions on selling.

Adam, Claire and the My Mortgage team