Bank / Mortgage advice

[ScottSI]

We have hit the cap that the National Bank places on business lending and are being moved to the commercial division. We are very happy with our relationship with the bank but the change of LVR limits of 80% under business to 65% LVR limit (for new purchases) under commercial is going to slow up our purchasing rate for further residental properties.

Are thinking of starting another mortgage group with another bank but are still weighing up the pros and cons. The bigger picture & relationship building is important also.

Has any one been through this process? what path did you follow?

[Grads]

Hi Scott,
If you don't already have another main lender on board, what you are currently going through is 1 good reason why to start new business with another lender. At least you are aware of the changes ahead so you can plan accordingly. Yes its important that you have a good relationship with your bank - at the end of the day though banks adhere to their guidelines which change very quickly - doesn't really matter how good your relationship is.. = which can affect you quickly. If your already with National, good idea to form new relationships with WPT, ASB or alike.
I've been through this process - in my case I hit the ceilng with ASB - now lending is spread with ASB, BNZ, WPT & ANZ. Its a good rule to always be in a position to buy if the right opportunity presents itself - If your opportunity comes up tomorrow would National assist?
All the best!
Grads

[ScottSI]

Hi Grads

Thanks for the first hand advice. Did you transfer some of your portfolio when you spread your lending or did you just take some cash over and start fresh and build a new cluster?

[mortgage broker]

ScottSI the main upside;

If the lending can be kept under a certain amount with one bank, things can be approved quicker sometimes as lending amounts can affect what a manager is able to approve before shooting it up to the higher level
Higher LVR

main downside - again depending on the lending amount, you could face less competitive pricing if your lender has a smaller portfolio

[ScottSI]

ScottSI the main upside;

If the lending can be kept under a certain amount with one bank, things can be approved quicker sometimes as lending amounts can affect what a manager is able to approve before shooting it up to the higher level
Higher LVR

main downside - again depending on the lending amount, you could face less competitive pricing if your lender has a smaller portfolio

Hi MB

We are at the level where the only option is to switch divisions if we want any more money. We do get a personal relationship manager, free coffee and invitation to bank events / courses so not all bad.

Approval times won't be an issue I feel, it is really the decrease of LVR (80% to 65%) that will slow us up. I have had some positive indications from another bank re new lending so I am thinking start a new loan book as discussed by Grads.

Just running the numbers on if I should take the last few properties across so I have some instant equity or just some cash.

[Nice]

You may run into the 'full disclosure' issue, in that each bank will want to know about the business that the other holds. I ran into this a while back when heading down this track, had an excellent relationship manager at ANZ; he had to turn a blind eye to what was happening at BNZ !!

[NovInvestor]

Hi Scott

My wife and I started with 1 home in 2010, and now have bought another 8 properties in slightly more than 2 years.

We still can buy at 80% with many banks out there.

We are using BNZ, ASB, Westpac, National, and Kiwibank.

So there are many options out there, you just need to talk to a good independent mortgage broker, and plan your finances.

Don't use just one bank, use many!

PS: didn't see you are being moved to commercial, so yeah that means you have too much asset under one bank I think. We are only with business managers at ASB and National right now, but our broker does it all for us. We don't like dealing direct with banks if we don't have to.

[Bricks & Mortgages]

HI ScottsSI,

When I am working with clients were possible I prefer to structure lending for investors with a growing portfolio over a number of lenders. Use the lenders first that have the better LVR policies. You will need to disclose all lending on all applications but this should not become an issue unless debt servicing becomes weak. It is much better if you have a clear understanding of your financial profile from a lenders perspective and then you can pre empt what Brick Walls may be coming your way and then your proposed new purchases can take these into account. A pre approval does not give you this clarity. One thing to also to consider when looking at this is , is there a way to NOT have your own home cross securitised with your rentals.

[ScottSI]

Hi All

Thanks for all the advice. Meeting with BNZ and Westpac this week. Think we will pull the last 4 places brought off National and take these across so we end up with plenty of equity at both banks.

We were with 3 banks and then ended up taking everything to National as others shut up shop in 2008 and would not loan any more but that ended up being a very good move so no regrets.

Thanks Bricks for the tips. We run a pretty tight ship when it comes to analysis and the portfolio is totally self funding currently in the banks eyes. LVR is sitting at 69.10% so it was the loss of the all the buying equity that I was going to lose that was depressing me.

Hopefully meetings go well this week and I can go buy something. I have my eye on a few places and I am having withdraw symptoms as been 3 weeks since I spent the banks money.

[Bluekiwi]

Hi Scott

My wife and I started with 1 home in 2010, and now have bought another 8 properties in slightly more than 2 years.

We still can buy at 80% with many banks out there.

We are using BNZ, ASB, Westpac, National, and Kiwibank.

So there are many options out there, you just need to talk to a good independent mortgage broker, and plan your finances.

Don't use just one bank, use many!

PS: didn't see you are being moved to commercial, so yeah that means you have too much asset under one bank I think. We are only with business managers at ASB and National right now, but our broker does it all for us. We don't like dealing direct with banks if we don't have to.

Ditto, use a mortgage broker - Mike Kingston at Mike Pero - is very astute.
They present you in the best light to many banks, so you dont have these sorts of issues.
Having said that, I have found that with many banks it makes your accouns a real mess, try and just stick with one R/C account.

[Wayne]

You may run into the 'full disclosure' issue, in that each bank will want to know about the business that the other holds. I ran into this a while back when heading down this track, had an excellent relationship manager at ANZ; he had to turn a blind eye to what was happening at BNZ !!

Full disclosure shouldn't be an issue. It is the banks policy that is pushing you to commercial rather than your ability to service. Full disclosure is more around your ability to pay.

[Nice]

Yes, but each bank wants to know what all your outgoings are, including those for the other properties that they do not support.

[Bricks & Mortgages]

That is not always a bad thing. Showing all your assets shows what you have accumulated over time and a strong position and if you have good yielding properties these can help strengthen your overall servicing.