Published at: 6/21/2016 3:29:33 PM
Think back to mid-2015 when APRA, which regulates Australia’s banks, imposed caps on the level of investment lending. It came hot on the heels of previous APRA initiatives also designed to take the heat out of investment lending to support more sustainable property price growth.
Loan to value ratios feel the squeeze
The catch to APRA’s initiatives is that banks were left to make their own choices about how they would rein in investment loans. This has meant a variety of approaches have been taken by different banks.
One common thread is that borrowing limits for investors have been tightened, and as a property investor you could face less generous ‘loan to valuation ratios’ (LVRs) than owner occupiers.
The LVR is the percentage of a property’s value you can borrow. The recent changes are important because you may have a deposit equal to say, 5%, maybe 10%, of a property’s value, yet it may not be enough to get you over the line.
Increase your odds of loan approval
Rather than assuming you have enough funds to invest in a rental property, it is important to speak with your ME Mobile Lender to understand exactly what sort of deposit you need.
As an investor, the purchase process is very much a business decision and this kind of upfront research makes a great deal of sense.
Short on a deposit – how about equity?
It’s always worth remembering, if you own your home or another investment property you may be able to use equity in the property in lieu of a cash deposit.
Your ME Mobile Banker can explain how it can work in your circumstances to expand your buying options or fast-track your ability to invest at today’s prices.