Securing a loan with favourable terms and competitive interest rates is a top priority for many property investors. However, navigating the complex world of finance can be challenging, especially when it comes to finding the best loan options. This is where finance brokers play a crucial role.
By leveraging their industry knowledge and expertise, property finance brokers can offer tailored loan solutions to meet the diverse needs of property investors, owner-occupiers, and first home buyers.
In this article, Bryn McCarthy, Finance Broker at Momentum Wealth, shares some key ways in which brokers can assist property investors in achieving their financial goals and making informed decisions for their property portfolios.
Reviewing existing loans
A good finance broker will proactively review their clients’ existing loans. Many borrowers fail to realise that better loan options may be available to them, even after obtaining a loan. Finance brokers reach out to lenders and financial institutions on behalf of their clients, ensuring that they secure the best deal possible. By constantly monitoring the market and staying updated on the latest loan offerings, brokers can help borrowers access more favourable terms and lower interest rates.
Avoiding cross securitisation
Cross securitisation is a practice where lenders tie up multiple properties and loans together. While this may benefit the lender by minimising their risk, it can be detrimental to property investors. By avoiding cross securitisation, finance brokers can protect their client’s assets, particularly their family homes. By keeping loans separate, borrowers can have greater control over their assets, enabling them to sell or refinance individual properties without affecting the entire loan portfolio. This approach can prove beneficial for property investors looking to expand their portfolio or leverage their equity for other purposes.
Changing loan terms
In an ever-changing financial landscape, loan terms and interest rates can fluctuate. Finance brokers possess the knowledge and skills to help borrowers adapt to these changes effectively. With the ability to refinance loans and switch to interest-only repayments, property investors can significantly reduce their overall repayments. This can generate more cash flow for households, allowing borrowers to allocate funds towards paying down non-deductible debt. Moreover, extending investment loan terms can further decrease monthly repayments, providing investors with increased financial flexibility.
Momentum Wealth case study
At Momentum Wealth, we have assisted many property investors in securing better loan terms and interest rates, resulting in substantial financial benefits. For example, in the below case study, a recent client, a couple with three properties including one under a company name, were facing escalating mortgage repayments and were considering selling one of their properties. However, instead of selling and missing out on potential future property market growth in Perth, our finance broking team proposed a refinance strategy that incorporated the three approaches outlined in this article.
By implementing these strategies, the clients were able to improve their monthly cashflow position by $2,300. Furthermore, through loan refinancing, they achieved an annual interest savings of $14,000. This not only provided them with financial relief but also offered additional protection for their family home.
This case study highlights the importance of exploring various options, as a broker’s role is to present all available alternatives. In this case, had it not been for our assistance, the clients may have proceeded with selling their property without realising there was a viable alternative. It also emphasises the value of conducting an annual loan review to stay informed about market conditions and potential opportunities.
By proactively reviewing existing loans, avoiding cross securitisation, and assisting with changing loan terms, brokers can empower borrowers to make better-informed financial decisions. The case study of one of our clients at Momentum Wealth exemplifies how these strategies can yield significant savings and provide borrowers with greater financial security.
Engaging a reputable finance broker when seeking a loan offers numerous benefits. These brokers have access to a wide range of lenders, including major banks and exclusive options that are specific to the broker channels. As a result, they can comprehensively compare rates and find the most suitable deal tailored to each client’s individual needs. With their industry connections and expertise, finance brokers provide support in securing better loan terms and interest rates, ultimately helping property investors achieve their financial goals. Additionally, they handle the entire loan process, from application to settlement, alleviating the burden and ensuring a seamless experience for borrowers navigating the complex lending landscape.