Westpac has different home loan types that are suitable for different types of investors.
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Westpac Property Investment Loan – Client Story
Jim in Victoria
Goal
Refinance existing investment properties and cash out the maximum available equity to purchase a new investment property and do a cosmetic renovation on one property.
Background
Jim owned six investment properties and the house where he lives.
Jim wanted to use some of the equity from his properties to buy another investment property and carry out renovations on one property.
When he approached his bank, they suggested that he cross-collateralise his properties. He wasn’t sure about this, so he reached out to us. As a savvy investor, he was seeking a second expert opinion.
Solution
Cross-collateralisation is where more than one property is used as security for a mortgage, as opposed to a standard home loan where you have one property securing one mortgage.
Under this structure, every property is linked and they are all treated as a single security. What this means is that if, later on, you want to refinance one of your properties for whatever reason, you’ll have to refinance the entire portfolio. Also, if you want to sell one of your properties, then you’ll first have to de-couple them. It’s usually better to avoid cross-collateralisation if you can.
Jim decided that the offer from his bank didn’t allow him to meet his objectives, which were to cash out the maximum available equity for renovations and a deposit on a new property. Jim also wanted a lower interest rate and more flexibility.
Home Loan Experts’ mortgage broker went to work. After clearly demonstrating that a cross-collateralized loan did not meet Jim’s objectives, we recommended he not go with one.
Instead, we structured each investment loan so that no single loan had an LVR exceeding 80%, so as to avoid LMI, while at the same time obtaining the maximum cashout possible. Ultimately, all properties were refinanced at a competitive interest rate while retaining high flexibility.
The best part was the fact that Jim received a total of $23,000 in cashbacks: $15,000 ($3,000 per property) in cashback came from Westpac for five properties; $4,000 from St George for one property; and $4,000 from RAMS for the last one.
Jim is now searching for an investment property to buy.
Talk to one of our award-winning mortgage brokers by calling us on 1300 889 743 or complete our free assessment form.