Cambridge dictionary states the saying ‘put your eggs in one basket’ meaning is ‘to depend for your success on a single person or plan of action’. I explain what this means in lending at the moment….
I recently sat down with a client who’s family through generations had banked with a major bank for over 100 years and is considered a high net worth family, but was told by their lender they couldn’t lend any more money. Even though their serviceability was clearly evident and their net wealth was more than what we could ever dream of!
In a matter of minutes, we could determine that having all lending with one lender didn’t put them in a better position, with multiple properties cross collateralised and not allowing them to make decisions with their own property portfolio.
After a few weeks and ‘detangling the portfolio’ we were able to spread some of their risk across multiple lenders, to put the control back in their favour and they could pick and choose when they wanted to buy or sell, using equity and proceeds to build their property empire.
It doesn’t matter if you’re a high net worth client or first-time investor, its important in this day and age to not think one lender can solve all your issues or create a good ‘track record’ because it doesn’t count for much anymore. Trying to build a relationship with a bank directly isn’t as important like it probably used to be, in light of the Royal Commission, APRA regulations and lender policy becoming more comprehensive and diligent (which is a good thing don’t get me wrong), with lenders appetite changing constantly, non-banks lenders and often major bank subsidiaries are filling the gap to allow customers to get back the control of their lending needs and use multiple lenders.
We are hearing and seeing some crazy things happening in the market, we recently had a client applying for finance and the lender determined their credit card average monthly spend was circa $10,000 so adopted this figure as their living expenses, when the client could verify to us half of that was their work expenses which they used their credit card to obtain frequent flier points and was reimbursed monthly, so a common-sense approach is needed.
With all the changes in lending, which we believe is positive and one we support, its time clients make informed decisions and not think one bank can solve all their issues, its not that world anymore.
Whether its dealing with the team at My Mortgage Freedom or a broker you know, do yourself a favour and deal with a broker who you can start a long-term relationship with and multiple lender options to suit your needs and help you achieve your goals.