Recently, I posted my first podcast where I was interviewed by Tyrone Shum. Tyrone runs the podcast show called Property Investory – created for people who want to learn more & are passionate about property investing. I shared with you how property investment is a scary world filled with spivs, spruikers, crooks and charlatans, and how I created Smart Property Adviser so I could educate and provide property advice you can trust.
We’ve all had that experience of looking back after some major shift in our lives. Initially, I didn’t know enough about property investing which is something that held me back from taking the first step. But I knew that I needed to do something after I went broke. I figured I would learn as much as I could about business and the property investment scene.
Being able to trace back to where it all started and having worked in a bank, I got to learn a lot. From that point, my direction changed, the ‘right’ people came into my life, many became my clients, and opportunities opened up. As an investor and buyer’s agent, one of the things I do is educate clients about that types of security the banks lend against… and why.
There are only THREE types of Security that a bank will take when lending money:
If you buy some shares in XYZ Pty Ltd, using only those shares as security – the bank will lend you the money in what’s known as a Margin Loan.
They’ll only ever lend you between 20% and 70% depending on the share and their opinion of the strength of that particular company.
If you approach CBA (for example) for a Margin Loan to purchase CBA shares – the maximum they’ll lend you 70% of the purchase price with an interest rate currently around 7.00%.
2. Commercial property
Buying commercial property? The bank will let you borrow up to 65% of the purchase price – that’s their comfort range.
However, they will go up to 80% for good clients. Interest rates are around 6.00 – 7.00% at present.
3. Residential property
BUT – if you’re buying a simple, straight-forward residential property, the bank will let you borrow 90% (some used to go to 97%) against that property.
The interest rate? TRY THIS – you could get an interest rate as low as 3.7%
The banks know their game! Their game is to make money!
They’re pretty good at it here in Australia – the combined net profit after tax this year for the BIG FOUR was about $31 billion!
Listen to the podcast from Property Investory here: