The banks are getting tougher and tougher with lending criteria, especially with investors who seem to have been unfairly tagged as a bit of a problem in the lending space.
If you're struggling to fund your next purchase or improvements then these five tips could help make the difference between a deal happening or not
Is that bank really the best bank for you?
This might sound simple but loyalty to a brand is the number one barrier we find in terms of people getting what they need. That bank may have served you well in the past but just because they're saying you can't do something, doesn't mean it can't be done. We're all for loyalty to people who look out for you, but don't be loyal to a big company just because you've got their logo in your wallet. Look at your options.
Do you have an owner occupied property?
LVR limits for rental properties are 70% LVR, if you've got an owner occupied property you could borrow 80% LVR on that. If you're not currently borrowing 80% against your owner occupied then you can ramp that up. If you're not living in a property that you own then you could consider moving in to one of your properties to allow lending up to that level.
If you've got lending split across different banks then you could consider moving in to another one of your rental properties so you could borrow 80% against that property.
Valuations are your friend
There has been a real shift to people "saving money" by just using bank Desktop Valuations. This is fine when you've got plenty of equity but they're often short of the true value of your property, especially if you've made improvements. Spending $600 on a Registered Valuation may open a considerable amount of extra equity for you to make the next deal work.
Could you unencumber a property and take it elsewhere?
Following on from the above is the solid option of splitting your lending across different banks to reduce risk. If you've got enough equity you could even get the mortgage removed off one of your existing properties which would allow you to use it as equity for your next purchase.
Are you maximizing all income?
If you've got a boarder, you're renting on Airbnb or you're achieving above average rent then your bank might not be using all of your income toward debt servicing.
Banks all have different policies and some either exclude certain types of income or scale them back to a lower percentage. Your bank may be doing this to you without your knowledge and another bank might welcome this income with open arms and lend you considerably more because of it. It's worth checking.
Does it really need to be a bank who funds your deal?
With new players on the market like Select Home Loans, you don't need to be working only with the traditional bricks and mortar banks.
For example we had a client with 5 rental properties wanting to buy a sixth. Her bank said no more lending was possible at all. Select were able to take 2 of her properties plus the new purchase at just over $400K. She pays just over 4% in interest but the return on the new property makes it well worthwhile.
It's not just mortgage lenders either. There are a raft of private funders out there. Remember money is so cheap that people with money are looking for a place to put it and get a return.. the private funders are firing up again.
Whatever your situation it's important to know that you're getting the right options and we're here to provide those for you. It's not about telling lies or doing anything silly, it's simply a case of finding the right policy to fit your personal situation and taking advantage of any areas that may suit you.
We're always happy to offer our expertise free of charge to review your position and ensure that you're getting all of the right options for you.
We hope this helps and we look forward to working with you in the future.
Adam, Claire, Greg and the My Mortgage Team