How investors looking to grow portfolios should select lenders

Perhaps the most important financing consideration investors have is selecting the right lenders to partner with. Lenders can be viewed as your partner to success – without them, building your portfolio may not be possible.

When people choose between different lender options for a loan, it is usually a very simple thought process: ‘what loan best suits my requirements?’. However, it is natural human behaviour to prioritise the most immediate questions when thinking about these decisions, such as:

• Which loan has the best rate at the time of signing?
• Which loan has the lowest application fee?
• Are there any promotional offers that take my fancy like rewards points?

But this is short term thinking. When you are looking to grow an investment portfolio over time, a loan should never be a ‘strait-jacket’. It’s important to remember as an investor, you’re looking for ways to have more options and possibilities in the future, not less! 

It is really about how to make sure you are always playing the long game – bringing your long-term goals front and centre in your decision making.  Property investing is a long-term game, and your financing strategy and lenders need to match up with these objectives.  Thinking ‘short term’ may ‘snooker’ you in the long run and stop you from achieving your goals.

Instead, the right questions investors should be asking is whether the lender and loan product can help you achieve your longer-term goal. Investors should be seeking to balance:

• Lenders that suit a diversified lending structure that allows you to multiply your borrowing power over time; and
• Lenders that offer the flexibility and control you need to grow a portfolio over time.  
• To go into further detail on these points, you are looking for some key loan features that become very useful for those trying to grow a portfolio, which are often overlooked in favour of the short term considerations. 

Lenders that can offer you the following features will pay dividends in the long run:

• Favourable policies on releasing equity, allowing customers to access equity with ease.
• Easy access to valuations on your existing properties, ideally through a computerised valuation system where the lender can provide an instant valuation without the need for a full inspection.
• The ability to split loan accounts and maintain separate offset and redraw facilities.

These may not be the first things you think of when assessing a lender, but as your portfolio grows and your affairs become more complicated, these are powerful tools. I encourage any budding investors to keep these in mind at the start of your journey, it will leave you in a better position down the track.