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Today, many Australians prefer to use a mortgage broker to arrange their home loan. However, there are still quite a few who’d rather walk down to the bank personally to arrange their mortgage. But, for investors, taking the DIY route might not be very beneficial in the long run. Why?

 
How investors can benefit from working with a mortgage broker
 

Because every successful investor has an expansive property portfolio to his or her credit. However, as the number of properties under your belt grows, it may not be as easy for you to borrow money as it was the first time.


Getting finance for an expanding property portfolio

Hitting the serviceability wall is the biggest hurdle property investors face as they try to expand their portfolio. And that’s where an experienced mortgage broker can come in handy.

In general, having too many loans with a single bank could be a problem as you grow your investment portfolio. There are two main reasons for this. Firstly, banks regulate the amount of risk they are willing to take with an individual borrower. Secondly, banks apply a certain amount of ‘loading’ to your interest rate on successive loans, which reduces your overall serviceability. Besides, each lender has different criteria for assessing your borrowing capacity, which can make a huge difference to the amount you can borrow eventually. These differences need to be understood and clarified with you during the lending process.

For example, does the lender include the rental from the new property into your income? If yes, what percentage of the rental is included? What is the assessment rate at which they calculate your serviceability? All these factors will determine how much you can borrow for successive properties..

However, as an investor, it is not possible for you to know the eligibility criteria applied by different banks while assessing your case. Fortunately, a good mortgage broker knows these rules, which helps them determine the banks you should go with at different stages in your investment journey. For example, it is better to obtain finance from a lender with a strict eligibility criteria first. For this, you might have to pay off some of your debts or give up on a credit card or two in addition to maintaining a stellar credit score. However, it would help you when you purchase more properties in the future, as you would have access to more deals from less restrictive lenders.


How a mortgage broker can add value to your investment property

All mortgage brokers are not the same. For example, some brokers may deal extensively with first home buyers, some might specialise in bad credit loans while some others may have unmatched expertise in the field of investment lending.

As an investor, it is important that you find yourself a specialist investment mortgage broker who is abreast of the developments in the sector. Such a broker would know of seemingly complex financial structures such as borrowing through a trust or SMSF. Besides, a professional broker would ensure that you avoid, or delay, hitting the serviceability wall by making a greater number of investment loans available to you as your property portfolio grows.

At HashChing, we have a created a network of ace mortgage brokers from across Australia that you can browse here. Through our website, you can not only view and compare competitive home loan deals but also find specialist mortgage brokers for your requirement. To get started, post your query online or fill up this contact form so that we can put a mortgage broker in touch with you.

 

By Vidhu Bajaj,
HashChing Content Writer

 

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HashChing is helping Australians by providing access to the pre-negotiated home loan deals. Obligation free consultation with one of our partner brokers might save you time, hassle and money.