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Splitting your investment and personal home lending across different banks

If you're a property investor then this is a key financing strategy that you should be considering.  The right mix is different for everyone but we're here to help give an objective view of the bank's lending options that will suit your needs and goals.

What are the benefits to splitting your lending across different banks?

There are 3 key factors

  1. Insurance against policy changes
  2. Limiting your treatment as a commercial investor
  3. The right bank product for the right scenario 

Policy changes are one of the biggest issues which can hamstring investors.  There are numerous examples but we'll take one from earlier this year where one bank put a halt on any construction lending over 50% LVR.

We had a client ready to build two new houses as rental properties and all of a sudden they didn't have enough equity... their own home and rentals were with this one bank and they had long term fixed rates so the cost of switching lenders was high.  If they had some lending with another bank then we could have got the funding from the other bank to complete these builds (or provide the required equity) without any legal or break fee costs.

Another classic is when the one bank changes their policy around interpretation of rental income, all of a sudden they say what they can lend you is much less and because of that you snap up that great property deal.  Whereas another lender may have been able to fund that for you.

The next reason is being treated as a commercial investor and the implications this has for you.  Every bank is different but for some it will be when you own 5 properties, for others it's when your rental income exceeds your salary income.  It may seem good to now have a business manager looking after your lending (and that does have some benefits) but this often comes with more hoops to jump through and more stringent reporting.

In some cases the cost of lending increases too as you're now deemed to be doing lending for business purposes rather than as a residential investor.  

Thirdly is getting the right product for your project.  Every bank will say they've got the right option and some are versatile enough to fit across any simple situation but... once you start getting multiple properties who are all in different areas, are different property classes, have different risk factors etc, then you need a more tailored approach to financing.

Each lender's appetite is different and can change.  By grouping similar properties together or unencumbering a property give you further options, we can maximise your lending and keep your costs down. 

The key thing to remember is that with one bank you're at the whim of a policy maker in Auckland or Sydney who may make a decision which overnight can stall your investments or force you to make changes which are not in your interests.

We take a holistic approach to managing the lending for your investments.  The colour of the logo of the bank is not important to us, it is simply a case of ensuring you've got sustainable lending options which are going to allow you to continue to have a profitable investment portfolio.

As a property investor myself (since I was 18) I'm well aware of the ups and downs of the market and pitfalls of various lending options.  I'd love to help more investors with the right lending options so if this was helpful then please share the link, or email me directly on to get in touch for a chat. 

Adam, Claire, Greg and the My Mortgage Team


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