Refinancing Multiple Properties: The Pros and Cons

When Refinancing Multiple Properties Makes Sense

Refinancing becomes worth considering when you hold two or more properties with varying interest rates, when your fixed rate periods are ending at different times, or when you want to access equity across your portfolio. Many property investors in Victoria find themselves with a mix of loans taken out at different times, often with different lenders, which means they're likely paying more than they need to.

Consider someone who owns an investment property in Frankston purchased three years ago on a fixed rate that's about to expire, plus a home in Cranbourne with a variable rate that hasn't been reviewed since settlement. The Frankston property might revert to a rate that's 1.5% higher than what's currently available, while the Cranbourne loan could be sitting on a standard variable rate rather than a discounted one. Refinancing both properties together creates an opportunity to negotiate based on the combined loan amount, which often results in access to rates and features that wouldn't be available when refinancing just one property.

The timing matters because lenders view multiple properties differently to single loans. When you approach refinancing with several properties, you're presenting a larger book of business, which can work in your favour during rate negotiations. However, the complexity increases with each additional property, particularly around valuations, income verification, and the sequencing of settlements.

The Pros of Consolidating Under One Lender

Bringing multiple properties under a single lender reduces the number of statements you're managing, streamlines your annual reviews, and often qualifies you for portfolio pricing. Portfolio pricing means the lender discounts your rate based on the total debt you're bringing across, not just the size of individual loans.

In a scenario where you have three properties with loan amounts totalling $1.2 million spread across three different lenders, each charging different rates and fees, consolidating them under one lender can reduce your ongoing costs. You'll have one point of contact for loan reviews, one online banking platform to monitor, and potentially access to offset accounts across all properties if the loan structure supports it. Some lenders will also waive ongoing fees when your total lending reaches certain thresholds.

The main advantage comes from the rate reduction. If your current loans average 6.2% and refinancing brings that down to 5.7% across $1.2 million, the difference in monthly repayments becomes significant. Beyond the rate itself, consolidating can unlock features like offset accounts or redraw facilities that weren't available on your original loans, which improves your cash flow management across the portfolio.

The Cons of Refinancing Multiple Properties at Once

The process takes longer and costs more upfront than refinancing a single property. Each property requires a valuation, which typically costs between $200 and $400 per property depending on location and property type. If you're refinancing three properties, you're looking at $600 to $1,200 in valuation fees before you've even lodged the application.

Lender assessment becomes more complex when multiple properties are involved. The lender will assess your serviceability based on the combined debt, which means your income needs to support the total loan amount across all properties. If rental income forms part of your serviceability calculation, the lender will typically only count 80% of that income to account for vacancies and maintenance costs. This can reduce your borrowing capacity compared to what you might expect.

Another consideration is the risk of concentrating all your debt with one lender. If that lender tightens their lending policy or you need to access additional funds in the future, you may find yourself limited by having your entire portfolio with them. Some investors prefer to keep properties with different lenders to maintain flexibility, even if it means marginally higher rates.

When Keeping Properties with Different Lenders Works Better

Separating your properties across multiple lenders makes sense when you want to maintain flexibility for future purchases or when different lenders offer specific features suited to different property types. An investment property in Mornington might perform differently in a loan structure compared to your owner-occupied home in Mount Eliza, and different lenders specialise in different lending scenarios.

If you're planning to access equity from one property to fund another purchase in the next year or two, keeping that property with a lender known for equity release can save time when you're ready to move. Similarly, if one property is positively geared and another is negatively geared, structuring them with different lenders allows you to manage tax implications and cash flow independently.

The downside is the administrative load. You'll be managing multiple statements, multiple annual reviews, and potentially different loan features across each property. If interest rates move, you'll need to contact each lender separately to negotiate or consider switching.

How the Refinance Process Changes with Multiple Properties

Refinancing one property typically takes four to six weeks from application to settlement. Adding more properties extends that timeline, often to eight to ten weeks, because each property must be valued and each loan assessed individually even if they're consolidating under one lender.

The application itself requires documentation for each property, including current loan statements, rental agreements if applicable, and recent rates notices. Your income verification needs to cover the serviceability for the combined debt, which means providing payslips, tax returns, and rental income evidence across the entire portfolio. If you're self-employed, the lender will want to see that your income can comfortably service the total loan amount, which adds another layer to the assessment.

One practical consideration is the sequencing of settlements. If you're moving three properties from three different lenders to one new lender, all three settlements need to occur on the same day or within a very short window. This requires coordination between your current lenders, the new lender, and the settlement agents involved. Any delay with one property can hold up the entire process.

Fixed Rate Expiry Across Multiple Properties

When you hold multiple properties with fixed rates ending at different times, you face a decision about whether to refinance them as they expire individually or wait until all fixed periods have ended and refinance together. Staggering the refinancing can spread out the upfront costs but may mean you miss opportunities to consolidate earlier.

If your Frankston investment property comes off a fixed rate in the next few months but your Cranbourne home isn't due to expire for another year, refinancing the Frankston property now and leaving Cranbourne until later might make sense if the current rate on the Frankston loan is significantly higher. However, if both rates are relatively close and you're planning to consolidate eventually, waiting until both are due might reduce overall costs and effort.

The key is understanding what rate each property will revert to once the fixed period ends. Some lenders revert to rates that are well above market, while others revert to a standard variable rate that's more competitive. Knowing this in advance allows you to prioritise which properties to refinance first.

Accessing Equity Across Multiple Properties

One of the main reasons investors refinance multiple properties is to access equity for further investment or other purposes. Equity release works by refinancing one or more properties at a higher loan amount, with the difference paid out to you at settlement.

If your Mornington property has increased in value and you want to use that equity to contribute towards another purchase, refinancing that property alone might be sufficient. However, if you need a larger amount and equity is spread across several properties, refinancing multiple properties at once allows you to access that equity in a single transaction. This can reduce costs compared to refinancing each property separately over time.

Lenders will typically lend up to 80% of the property value without requiring lender's mortgage insurance, so the amount of equity you can access depends on current valuations and your existing loan balances. If property values in areas like Cranbourne or Frankston have increased since you purchased, that additional equity becomes available through refinancing.

What It Costs to Refinance Multiple Properties

Valuation fees are the most immediate cost, followed by discharge fees from your current lender, which typically range from $150 to $400 per property. If you're refinancing three properties, expect to pay $450 to $1,200 just in discharge fees. Some lenders will contribute towards these costs if you're bringing across a large enough portfolio, but it's not guaranteed.

Application fees vary by lender, with some charging no application fee and others charging $600 or more. Settlement fees and conveyancing costs apply to each property, which can add another $1,000 to $2,000 per property depending on the complexity of the transaction. When you add up valuations, discharge fees, application fees, and settlement costs across three properties, the upfront cost can easily reach $5,000 to $8,000.

The question becomes whether the ongoing savings justify those upfront costs. If refinancing reduces your interest rate enough that you're saving several hundred dollars per month across your portfolio, the payback period might be six to twelve months. Beyond that point, the savings continue for as long as you hold the loans.

Call one of our team or book an appointment at a time that works for you to discuss how refinancing your property portfolio fits with your current situation and financial goals.

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