Naturally, finance plays a huge part in a property investor’s life and at the moment things are being made more difficult for us. But let’s not despair, it will get better, we just have to be patient.
Over time conditions always change. The trick is to make it to the next change. For some investors, the issues around getting a loan are forcing a rethink of their whole strategy. That’s not necessarily a bad thing though and may unearth new opportunities at the same time.
So, what would you do if your Bank doesn’t want to give you any more money? More importantly, what can you do?
First, consider your current position. Which Banks are you with? The majors are all increasing rates to an alarming degree at the moment. Regardless of the reasons, the rates still keep going up and we’ve seen Credit Guidelines start changing as well.
Another option is to think about moving part, or all, of your portfolio to another lender to get a better overall position. Moving one loan to gain a 0.50% better rate doesn’t impact cash flow all that much. You may want to consider doing a number at the same time, using several lenders. Remember, any refinance will mean your properties will be revalued so bear that in mind if you have concerns about what they will come in at. The new lender may have better conditions to suit your circumstances rather than a rate improvement.
The cost of the refinance, your time and effort, should be commensurate with the benefits from the refinance. So, the interest rate, the savings in interest repayments and more importantly the extra equity released should make sense.
Some investors have shown a preference for the big banks in the past. I have even seen some investors who have their whole portfolio with the same Bank. Having your loans with a big bank can lead to a feeling of safety because they are so big but, on the other hand, you are trading off your ability to make flexible decisions about your wealth creation opportunities.
Basically, what it comes down to is that Banks are simply a means to an end. They supply the money so that you can buy assets to create wealth for retirement. However, the major Bank’s are not the only game in town and as we have seen, they can be manipulated by the Government Regulator, APRA.
Clearly though, Investors should be chasing the money rather than the rate and in this new era, the money may well lie with the smaller Lenders. The willingness of these lenders to be imaginative and creative in order to gain market share will be interesting to watch unfold. I’m optimistic that we will see innovative solutions arrive to fill the vacuum left by the major players. Let’s face it, the opportunity is there for any lender who wants to take the bull by the horns and make a play in the market.
From my point of view, an investor focused loan product is exactly what is needed right now. Combine it with a generous servicing calculator, a common sense approach to policy, interest only option and you have a winner.
It’s not all bad news though. Regardless of the conditions, we are always looking to maximise your position and get you a great result. Whether that is based on an overall strategy or a review on an existing portfolio we are familiar with most situations. We are still here and we are on your side.
I don’t blame you for thinking that everyone is ganging up on property investors. When you consider how the Banks are treating us at the moment it’s completely understandable. It seems like anything that has the word investor in it is being slugged on price.
I reckon you could charge a premium for an Investor latte at the moment.
Let one of our Mortgage Advisers look over your situation and provide you with an overview of your portfolio.