You own four investment properties across Auckland and Hamilton. Your portfolio is worth $3.2 million with combined debt of $2.1 million. The properties cash flow positively, you've never missed a payment, and your equity position is strong at 34%. But when you approach your bank to refinance or release some equity for your next purchase, they decline.
Back to Alternative Lending Solutions Guide
Their reason? "Your portfolio is too complex. We can't service all these properties under current lending criteria. Your debt-to-income ratio exceeds our limits."
This is the frustrating reality for many multi-property owners in New Zealand. Banks that were happy to lend for your first three properties now won't help with refinancing, even when your portfolio performs well and you're seeking reasonable requests.
Portfolio refinancing provides solutions when banks decline to refinance multiple properties. Whether you need to consolidate loans, release equity, restructure debt, or simply move away from a bank that won't support your growth, these facilities recognise that property portfolios require different assessment approaches than single-property mortgages.
Portfolio refinancing is the process of replacing existing mortgages across multiple properties with new lending facilities—either with a different bank or with an alternative lender when banks decline. For multi-property owners, this becomes necessary when:
Banks have become increasingly conservative with property investors:
| Bank Challenge | Impact on Portfolio Owners | Result |
|---|---|---|
| DTI restrictions | Maximum 7x income across all debt | Decline even with positive cash flow |
| LVR rules | Per-property and aggregate limits | Can't release equity despite overall position |
| Complexity aversion | Prefer simple single-property loans | Decline multi-property applications |
| Policy tightening | Reduced investor lending appetite | Existing customers can't refinance |
| Servicing tests | Use test rates 8-9% | Fail despite actual rates being 6-7% |
The key issue: Banks assess portfolios using residential mortgage criteria designed for owner-occupiers, not investment portfolios. A property portfolio generating $180,000 annual rent might be declined because the owner's personal income is "only" $95,000—even though the portfolio demonstrably services itself.
Alternative portfolio refinancing assesses your situation differently:
| Factor | Bank Assessment | Portfolio Refinancing |
|---|---|---|
| Income focus | Personal employment income | Rental income + personal income |
| DTI calculation | All debt divided by personal income | Holistic portfolio serviceability |
| Property assessment | Individual property basis | Portfolio-wide approach |
| Cash flow | Tested at 8-9% rates | Actual cash flow performance |
| Complexity | Avoided | Understood and accommodated |
| Security | Per-property limits | Cross-collateral if beneficial |
David Martinez, 44, had built a solid investment portfolio over 12 years while working as an engineering manager earning $145,000 annually.
His portfolio:
Total portfolio:
David's existing bank refused to refinance when his fixed-rate terms expired. They offered variable rates 1.2% higher than their new fixed rates, essentially forcing him out.
Bank's reasoning:
David's frustration: "They financed these purchases originally! The properties cash flow $31,000 positive annually. I've never missed a payment in 12 years. Suddenly they want me to sell half my portfolio because their policy changed?"
Luminate refinanced David's entire portfolio:
Loan structure:
Assessment approach:
Monthly costs comparison:
18-month refinance plan:
David's perspective: "Paying an extra $2,900/month is painful, but the alternative was selling properties at the wrong time. My portfolio still generates positive cash flow even at 9.25%. The 18 months gives me time to find a lender who understands investment portfolios, not just residential mortgages."
1. Your bank won't refinance existing portfolio
Banks change policies frequently. Even excellent customers find themselves unable to refinance when:
2. Portfolio performs well but exceeds DTI limits
The numbers work in reality but not in bank calculators:
3. You need equity release for next purchase
Your portfolio has equity available but banks won't release it:
4. Cross-collateralisation creates problems
Your properties are cross-collateralised and you need to:
5. You're moving to specialist property lender
Using alternative refinancing as bridge to specialist:
1. Properties are negatively geared significantly
If portfolio loses substantial money monthly:
2. You have other refinancing options available
Before using alternative refinancing, exhaust other options:
3. LVR position is already stretched
Higher rates make high-LVR portfolios riskier:
4. No clear exit strategy
Alternative portfolio refinancing needs an exit plan:
Back to Alternative Lending Solutions Guide
Before alternative lenders, try specialist banks who understand investors:
Specialist lenders include:
Advantages:
Requirements:
If your DTI is slightly over bank limits:
Strategies:
Calculation example:
If you have equity in your family home:
Strategy:
Caution: Putting family home at risk for investment portfolio
Instead of refinancing entire portfolio:
Approach:
Option A: Alternative Portfolio Refinancing (18 months)
Costs:
Benefits:
Option B: Sell One Property to Meet Bank DTI
Costs:
Benefits:
Option C: Specialist Property Investor Bank
Costs (if accepted):
Benefits:
Q: How quickly can portfolio refinancing be arranged?
A: Typically 15-25 business days for multiple properties. More complex than single property due to multiple valuations, titles, and security arrangements. Start process 6-8 weeks before existing loan terms expire if possible.
Q: Do all properties need to be cross-collateralised?
A: Not necessarily. Structure depends on your situation. Cross-collateralisation can provide better rates but reduces flexibility. We assess what structure best suits your goals and circumstances.
Q: What's the maximum LVR for portfolio refinancing?
A: Typically up to 70% portfolio LVR. Some situations up to 75% if portfolio performs exceptionally well. Lower LVRs (under 65%) get better pricing. Portfolio assessment is holistic, not per-property.
Q: Can I release equity during portfolio refinancing?
A: Yes, if portfolio LVR allows. For example, if portfolio LVR is 50%, you could potentially refinance and release equity up to 65-70% LVR, freeing up 15-20% of portfolio value for next purchase or other purposes.
Q: What if my properties are with different banks?
A: Not a problem. Portfolio refinancing can consolidate loans from multiple banks into single facility. This often simplifies administration and may improve overall terms despite higher rates.
Q: How do you assess rental income?
A: We look at actual rental income (via tenancy agreements and bank statements), property manager statements, and market rental assessments. We typically use 75-80% of rental income in serviceability calculations to account for vacancies and maintenance.
Q: What's the path to refinancing back to banks or specialists?
A: Most portfolios refinance to specialist property lenders within 12-24 months. Requirements typically include: demonstrated payment history, portfolio DTI improved to 8-9x, maintained or improved LVR position, and continued positive cash flow. We help plan this pathway from day one.
Q: Can I add properties during the facility term?
A: Generally yes, depending on facility structure and overall portfolio LVR. Adding properties may require facility variation and additional security assessment. Discuss growth plans during initial application to structure appropriately.
Multi-property portfolios require specialist lending expertise that understands investment property economics. Contact Luminate Financial Group to discuss how our portfolio refinancing solutions can help when banks decline.
📞 Call 0800 333 400
📧 Email askus@luminate.co.nz
🌐 Visit luminate.co.nz