Page 14 - Loan Structure Solutions

8) Managing borrowing capacity

There are a number of ways to manage and maximise your borrowing
capacity and discussing this in detail is beyond the scope of this report
– it’s a whole separate report in itself. However, it is important to make
the point that the loan structure you have (i.e. in respect to the products
you use, fixed versus variable and lenders that you use) can have a
material impact on your borrowing capacity.

This can only be addressed by you through undertaking some planning
by sitting down with your mortgage broker and developing a debt
strategy. Sometimes something as simple as the order in which you
use certain lenders can be the difference between being able to
expand your property portfolio or not

9) Keep your LVR as close to 80%

Most lenders will lend up to 80% of a property’s value without charging
lenders mortgage insurance. Lenders mortgage insurance is a very
costly once-off fee that is charged to cover the lender if they suffer a
loss (due to you defaulting) as a consequence of lending you more
than 80%.

My philosophy is; if you are going to
give a title to one of your properties
to a lender, it is reasonable to
expect the greatest amount of
flexibility as possible in return. That
is, the ability to draw up to 80% of
that property’s value if you wish to
do so.

The way I see it, the higher your
credit limits are, the lower your risk
(assuming you are disciplined with

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