Loan structuring can save you thousands of dollars over the course of your property investment journey.

Tip 1:

Use an offset account and borrow the maximum.

Borrow the full cost of the property and deposit any additional cash you may have in an offset account which you can access as needed.

Structure your loan repayments as interest only as this will allow you to accumulate all surplus cash in an offset account, instead of reducing the loan principal, as this preserves the principal at its original value, which may be important for future tax benefits.

Tip 2:

Avoid cross securitisation as much as possible.

Cross securitization is where you have an investment loan secured by two properties ( ie your home and investment property).

It doesn’t allow you to maximize borrowable equity and by avoiding cross 

securitisation, you can determine which properties to revalue and when, as the banks will have full control if the properties are linked to each other.

Also it ties you to a particular lender and reduces your flexibility and you have no control over the sales proceeds, as the bank can control all sales funds if you sell the property, and then force you to contribute to repaying the debts of their choice.

Tip 3:

Diversify your lenders as much as possible. If a lender knows too much about you, they could have too much control over your business and investments. By using multiple lenders, you can maximize your borrowing capacity and banks are less likely to take you for granted, if they know that they don’t have all of your business.

Bank property valuations can vary significantly between different banks, so having a relationship with 2 or more banks will enable you to maximize borrowable equity.

Tip 4:

Staggering the expiry of fixed rates will give you more flexibility to review your interest rates at regular intervals.

Tip 5:

Keep personal banking separate from business banking. Sometimes a bank can know too much about you and have too much control. Keeping things separate means that you can control the information each side has about you.

Tip 6:

Always seek professional advice, get the right advisors when establishing your loans to ensure you are starting from the best possible position.

To speak to our trusted finance partner, contact us @ propertyloans@realrenta.com and we will arrange for a lending specialist to call you.