Most banks in New Zealand charge the same interest rates for home loans and property investment loans when you have just one investment property, but as you buy more investment properties the banks will mostly start to treat your investing as a business and start charging the higher business or commercial interest rates.
Getting Things Right & Saving You Money
As mortgage advisers we will always try to structure as much of the money (loans) for investment purposes to help maximise any tax benefits, but also at the lowest possible residential interest rates to save you money.
This is where a good adviser can really save you thousands of dollars each and every year.
A lot of people have arranged their finance directly with their bank and missed out on the savings available and in many cases that is money that is not able to be recovered.
Protecting Your Interests
Of course a bank will always structure things to protect the bank, not to protect you.
While we all hope that things will always go as planned there are things that can derail the best plans and a good mortgage adviser has experienced examples of these things and should be able to help protect you from these problems.
The key is to avoid “interlocking guarantees” which the banks insist on.
Here are three common occasions that cause issues;
Leaking buildings – In Auckland and around the country many property investors (and home owners) have been unlucky enough to end up with a property with weather-tightness issues. Of course now we know the types of properties that are more prone to leaking, but that was not always the case and of course there are plenty of property investors that have been caught with this problem.
Drug use within your investment property – this is now more common than most people think and while most drug use is quite minor there are some instances of serious drug use and drug manufacturing (P-Labs) that will cost you thousands of dollars to remedy.
Bank policy changes – the banks are always changing policy and this can cause some huge financial issues for property investors that are trying to grow a property portfolio especially if properties are mortgaged with the same bank where there are interlocking guarantees.
Having the correct mortgage structure gives you (as the property owner) more control over your finances, rather than being dictated by the bank. This does not mean that all issues can be avoided, but it typically gives you the ability to manage the issues for a better outcome.