Spread lending?

Question from Peter updated on 16th April 2013:

Now that the National Bank and ANZ are one, all my lending is with one lender ($1.6 million) .Would you recommend that I split my lending and look for another lender. I'd like to borrow for more properties. Currently I have seven rental properties.

Our expert Kris Pedersen responded:

I strongly recommend split banking. What you don't say is whether you have your own home or not. If you do ideally that would be the property I would recommend being elsewhere and look to hold as much debt as you can against the investments and pull as much equity into your home as possible. In this case I recommend not doing any investment lending with the bank that holds your personal home but have a revolving credit facility from where you can draw deposit funds and renovation funds. This way when a bank says no you have access to deposits so can access alternative lending options in the market.

Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz

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