A mortgage broker’s guide to improving a portfolio’s cash position

After he had successfully built a 17-property portfolio, Smart Property Investment’s Phil Tarrant now aims to improve his portfolio’s cash with the help of his mortgage broker and the rest of his financial team.

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A lot of property investors nowadays are finding it harder to get additional finance due to the recent changes in lending regulations put into effect by the Australian Prudential Regulation Authority (APRA) in the hopes of slowing down the rampant price growth in Australian property markets.

However, Aussie Parramatta’s Ross Le Quesne believes that, at the end of the day, lenders are always keen to loan money because that’s where most of their profitability comes from. Improving a portfolio’s cash flow position and ultimately continuing its growth depends on which strategy a property investor will choose to implement.

There are a lot of lending options available to property investors, so it’s important to know which one will save you the most money at the same time as it allows you flexibility as an investor. Work out the leverage and make sure it’s in your favor, Phil said.

In Phil’s case, Ross suggests looking into shifting from variable rates to fixed rates


According to the mortgage broker: “What we'll first look at doing is requesting pricing across lenders on a variable rate to see where we can get to.”

Three of Phil’s 19 loans are with one lender. His highest interest rate with the said lender is 5.74 per cent while the lowest is 4.9 per cent. The property investor and his financial team are now looking into shifting those three loans into a fixed position at 4.4 per cent, which can save them $7,500 annually over a three-year period or $22,000 in total.

Ross said: “We've highlighted what potential savings we can do with fixing the loans … Obviously, [this] lender … is a no-brainer [and] that is something that will get in place straight away because the savings that we're going to have there [in staying in that lender] by switching to fixed [interest] is something.”

Aside from that, Phil can also consider drawing equity out from his existing properties or refinancing his mortgage.

“It [will be] just be a wait and see … what [the lender] come back to with a variable rate and then we decide what we're [going] to do,” the mortgage broker shared.

At the end of the day, it’s all about prioritisation—which strategy will have the biggest positive impact with the least amount of work and time?

Phil said: “We should be concentrating on [where we could get the biggest savings] … There's another lender here [and] we have five loans with [them] … If we do the same rating, we're going to save ourselves $800.”

“It's not [too bad but] right now, there are other priorities ahead of it … There's some savings there but it's not as considerable as [the others]. That's what we'll get sorted,” he added.

Value added by mortgage brokers

It’s understandably hard to make decisions about mortgages and interest rates considering all the numbers and negotiations involved, as well as the cash flow at stake, which is why finding a reliable property professional is instrumental to an investor’s success. According to Ross, while being a mortgage broker entails hard work, it’s fulfilling to be able to add value to someone’s wealth-creation journey.

He said: “It's great being able to show someone that, ‘Look, you could potentially save over $25,000 a year by just making some simple tweaks.’ ”

“It just shows the importance of regularly reviewing your portfolio ... You just need to make one phone call and we can look at all of them rather than having to do it yourself and call around your six different lenders and then work out the best option,” the property professional explained further.

While some investors still choose to deal with banks and lenders directly, it’s worth noting that 54 per cent of all new loans are now done by brokers—a 36 per cent growth over the past decade.

Phil said: “Obviously, what brokers are doing is beneficial for borrowers … I wouldn't be doing this if I didn't have a broker [because I don’t] have the time, effort, and bandwidth.”

Since mortgage brokers encourage regular home loan health checks, progress can be a seamless process especially with the help of the rest of the financial team.

“We also need to bring in other people who are part of this team that we've put together to help us invest in property—our accountant, [who can view this] … from a taxation growth strategy perspective ... and buyer's agents, [who will consider] our appetite for continued borrowing capacity to invest in properties,” the property investor shared.

Phil and Ross’ final advice for property investors: Take responsibility for your mortgages. Makes sure that you consistently review your loans in order to make sure that it’s still the most appropriate choice at any given time based on your personal financial situation.

Get in touch with your lenders, either by yourself or with the help of professionals, so that you know when to revise your interest rates and ensure that you’re getting the most competitive rating possible.


Tune in to Phil Tarrant’s portfolio update on The Smart Property Investment Show to find out how you can stay ahead of the game when attempting to get a loan from banks and lenders for a property, how a shift from variable rates to fixed rates could impact your portfolio, and how the future plans for your investment can impact the loan you require.

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