The property investment market has certainly been hot & as a result the Reserve Bank of Australia has tried to cool this area down. Any success has been helped by APRA (Australian Prudential Regulation Authority#) who have put pressure on the banks to slow investment lending. The banks have responded by tightening the amount of rental income that can be used, reducing or completely abondoning the use of negative gearing to assist with the servicing* of an investment loan & loading^ loans of other financial institutions which restricts that amount of money that can be borrowed. Lenders have also increased interest rates on investment & Interest Only loans - however they are continuing to reward equity in owner occupied lending. Perhaps the biggest change is the maximum Loan to Value Ratio (LVR) that lenders will accept for the purchase or refinance of an investment property.
The goal posts are being moved on a regular basis & it is hard to keep up with the changes. This is where your Mortgage Choice broker can assist you with checking how much you can borrow & how best to secure your investment loan. Call Lorraine to discuss your options on 9775 2430 or 0421 240 129.
#APRA oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurance, friendly societies and most members of the superannuation industry. APRA is funded largely by the industries that it supervises. It was established on 1 July 1998.
*ability to repay your loan
^increasing the actual repayments by a set margin amount