Why You Should Use Multiple Lenders To Service Property Loans

You have a big portfolio and you have great ambitions too. Naturally, you will be looking forward to getting more than one loan serviced, for one or several properties. If this be the case, I will advice you in all earnestness to look for multiple lenders. Let me take you through 5 problems that dealing with a single bank/lender can pose to you.

Not advisable to have a single lender access your entire equity

If you deal only with one bank, you make yourself more vulnerable. After all, they will have ready access to the equity you have built in all your properties.

Let me remind you that this is the case even if the properties are not cross-collateralised. In other words, the bank (your sole lender) will freely access all your equity even if all your assets are not tied together.

Threat of cross-collateralisation

If you are tied to a single lending firm and it cross-securitises or cross-collateralises your property, you will have to dance at its whim. Let us take an instance where you are looking to pick up another property for your expanding portfolio and at the same time the lending house is adopting conservative measures.

What happens in this case? Naturally, the bank does not support your purchase and you will have to seek help from elsewhere at what may just be very poor terms (negotiation Waterloo).

Difficulty in releasing equity

If your security is with multiple lenders you can have your own say while releasing equity because you will definitely use the one which has shown capital gains.

On the other hand, if the loans are serviced by one single lender, your equity card will be misplaced because a few properties in your portfolio would have come down in value thus cutting out the capital gains in other properties. Naturally your lender will have the upper hand.

The mortgage insurance premium dilemma

If your assets are tied with one single bank, mortgage insurance premiums will mar your negotiation if you are looking for more than 80% of a property value as loan amount. The reasoning is simple:

The lender will charge you the mortgage insurance premium not only on the property in question but on all your properties. Is it difficult to guess where this tactic will take the total mortgage cost?

Multiple lenders means more wooing angles

Different banks have different yardsticks of judgement. Surely you will pass at least one such yardstick at any given time. As an instance, bank A may give you a good deal if your property is very well located. Bank B may prioritise you if you buy a waterfront property and so on.

You will miss on this bargaining tool if you deal with a single lender.

If you do not worry too much about discounts on high loan volumes, there is nothing that can bind you to a single lender. The pick is yours to take.