Combine Loans for a Better Rate Deal

Posted on 19/02/2016  
Combine Loans for a Better Rate Deal

Investors can get a better interest rate if they include their existing home mortgage in a combined loan application.

Experienced mortgage broker Louise Lucas says that people who have a personal principal and interest mortgage and are applying for a loan to buy an investment property can often get a discounted interest rate if they offer both loans to the one lender.

“If you have owner-occupier debt and you’re applying for an investment loan, you can combine the two to get a much better deal on the interest rate,” she says.

“They have to be separate loans for tax purposes but you can combine them in one application. The bank will give you a better rate of interest because they want to increase their owner-occupier loan percentage, so they’re interested in getting your home loan as well as the investor loan.”

This could shave 0.15 or 0.3 points off the interest rate for the investment loan, Lucas says.

But she warns borrowers not to make the interest rate the only factor in their choice of a loan product. A cheaper interest rate may come with extra costs and may lack other benefits.

“People chasing a rate only will never get what they need from the loan process,” she says. “If you think it’s just about the interest rate, you’re making a mistake.”

Lucas is the founder of the Property Education Company, a member of the Hotspotting.com.au Panel of Partners.

Hotspotting founder Terry Ryder is hosting a free webinar with Lucas as guest presenter on Tuesday, 23 February. The webinar, titled “How to get an investment loan in 2016”, runs at 12.30pm (NSW and VIC time).

To register for the webinar, follow this link.

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