Mortgage Reviews

Ryan, Eddy and I have been reviewing a lot of client’s mortgage positions lately. Clients’ reasons have varied from being very concerned about cashflow to wanting to know how large their borrowing power is as they plan to go on a buying spree. Interestingly quite a large number don’t have any immediate plans to borrow over the next 12 months but are just wanting to ensure they are in the best position with the large number of changes that have hit the funding markets over the last 24 months.

There are many reasons to get reviewed but the main motivations we have been seeing include the following:

• Interest rates – as per the above Market Update blog rates are moving a lot. We are still seeing borrowers come off interest rates in the low 2% range having to consider a rate which now starts with a 5. With today’s inflation news these are likely to move even higher.
• Interest only – when looking at cash flow it is not all about the rate. With most banks making the rollover of interest-only terms much harder than in the past, maintaining interest-only terms is proving vital for many investors as they face higher rates combined with the loss of deductibility. If you need it, make sure you are going to be able to continue to access it well before your interest-only terms expire.
• Planning to sell- If you have more than one property at a bank it is almost guaranteed that they along with the loans will be cross-secured. If you are selling and wanting to access some of the sales proceeds (rather than just purely paying down debt) make sure you get reviewed first otherwise you may get a nasty surprise on settlement day with the bank taking ALL sales proceeds and applying to other residual debt.
• Plans to buy – we are seeing increased buyer activity after a slow winter and with the large jump in interest rates most borrowers’ lending capacity has changed a lot in comparison to where it was 12 months ago.
• Restructuring of debt – even with the interest rate increases we have found several borrowers who now have excess cash from either selling other properties down or wage increases. Often restructuring their existing facilities into offset or revolving credit structures gives them more flexibility and results in cost savings.
• Loss of interest deductibility – after not hearing many investors talking about it we are starting to get more who are aware that April 23 is coming around quickly which will make cashflow even tighter for those who are holding investment stock built prior to the 27^th of March 2020.

If you would like to receive a review for any reason please contact your normal mortgage advisor or email HERE and we will be in touch with the next steps from there.