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Ben Kingsley Blog post by Ben Kingsley

Investment Loan Structure

Most Property Investors realise that debt plays a part in operating most investment properties.  Furthermore, those sophisticated investors who learn that ‘sensible’ leverage or borrowings can accelerate their potential investment returns, take an active approach in better understanding finance and finance structuring through working with professionals who aid them in getting the best possible investment loan structure.

What is investment loan structuring?

Loan structuring is all about structuring your finances to allow for the separation of non deductable debt from deductable debt (investment debt).  But it shouldn’t stop there……..

Superior loan structuring of finance should also ensure that the structure is set up to accommodate future plans.  These plans could include:

  • Debt Elimination options—Noting payment first of non-deductible debt
  • The Future leasing on your existing Owner Occupied home and the potential Offsetting of interest and possible future tax benefits
  • The non cross securitisation of more than one security (property) per loan/mortgage
  • Provision for automated repayment options and full use of interest minimisation functionality within the loan and banking structure
  • Factoring in of future equity  and investment needs and retirement goals, including wealth and income targets
  • Ensure future cash flow needs are accommodated for, without effecting the  loan repayments/commitments

The future plans also need to work in with one own day to day banking requirements from their lender.  Product features should also include:

  • Competitive Interest rates (On-going, not just cheap today to win your business, then more costly later on)
  • Internet & Phone Banking
  • Low Fees or a suite of products that justify an annual fee payable—like what’s on offer under a professional package
  • Limited or no penalties fees for restructuring or splitting/hedging options

Our experience in dealing with hundreds of clients is most finance / mortgage providers, notably the lenders direct, have little understanding of what’s required in regards to superior loan structuring for the most effective outcomes for the borrower.

Furthermore they lack the knowledge and experience with clients who have more than one investment property and usually lock in all the clients’ securities against all mortgages, putting the bank in a position of extreme advantage in holding all securities unnecessarily.

Property Investors looking to build on a property portfolio should ensure they deal with professionals who specialise in the area they are wanting to invest.  In terms of property investment its now different—find an accountant with lots of Property Investment experience, find a mortgage broker (like Empower Wealth) who don’t sell property but specialise in the correct financing of property investments and finally find a solicitor well versed in  property transactions.

If you’re looking for some Property Investment Advice, we offer complimentary one hour (no obligation) appointment. Just fill in the form at the top to book an appointment with us.


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