Are you thinking of purchasing an investment property? Have you got your finances pre-approved subject only to a valuation on the property? We are still seeing the effects of the APRA warning on the lenders flowing through to policy changes. Now more than ever, it is crucial to seek advice on your finances before making an offer on a property. Here are four recent changes happening to investment lending and what each one can mean to investors like you*:
1. Most lenders are increasing their interest rates on investment loans compared to normal owner occupied lending. This means you will pay more for your investment loan compared to your owner occupied. It is the ideal time to shop around the lenders for the best rate.
2. Lender’s are increasing the deposit requirements for investment property loans. This means you will have to use more of your equity in order to secure the investment loan you are after. This may have implications on the size and growth rate of your investment portfolio.
3. Some lenders are only lending for investment purposes to existing clients. Therefore, if you are not currently a client, you will likely be declined for investment loans. A decline does go on your credit report and can make it harder for the next application. So make sure you do your homework first.
4. Some lenders have stopped investment lending altogether, whereas others have not changed their policy at all. Changes are still flowing through and Investment lending will continue to be very dynamic. We are seeing policy changes daily in our office.
Remember there are other places to invest your money. Property is not the only vehicle.
We urge all people thinking of investing in property to contact our office for a confidential chat regarding the implications that these policy changes will have for them.
*These changes will affect different borrowers differently. There are many factors involved.
