Changes in Investment Lending Conditions
It is getting harder and harder and now some lenders are refusing to lend in certain postcodes and others will only lend to 70% loan to value ratios for off-the-plan in Sydney and Perth – even lower in other parts of Australia.
Why? Because the banks clearly see what the developers of these apartments blocks are choosing not to see themselves –valuations are not going to stack up as there are simply too many of them. And Terry Ryder, from Hotspotting.com.au, estimates that 90% of these in Brisbane have been sold to investors. If you have paid a deposit for an off-the-plan purchase, be wary and reserve all cash until you have the valuation in your hands and have secured your loan to unconditional status. You do not want to be selling other houses just to settle on one of these apartments. The alternative is to risk losing your deposit, but if you then fail to settle, the developer can sue you for the difference between what they sold it to you for and what they sell it for later – definitely buyer beware!
Interest rates have also been creeping higher for investment loans, as have the way banks are testing serviceability with the minimum interest rate of 7%, plus will not lend more than 90% loan to value ratio including Lenders Mortgage Insurance. Some lenders have reduced the amount of benefit they give for negative gearing down to 40% and others only accept 60% of rent paid.
However, we have been offered the deal of the centurywith an investment variable rate of 3.59%* (comparison rate 3.98%) for new purchases but they MUST settle before the end of this year – 2016. So if you are thinking of buying soon, get on board with this fantastic rate! How great to have an investment that pays so easily for itself? This is part of a professional package loan, credit card included.
*We are one of only 20 brokers across Australia to be able to offer this great rate!
Our first webinar went really well!
With guest presenters, Colleen Tarrant from Ban Tacs – property investment accountants, and Bernadette Janson from The School of Renovating talking about Air B&B and making it pay while you renovate. If you would like to listen to the recording, please send a return email to us at email@example.com
We are excited about our up and coming events for next year as Greville Pabst, Executive Chairman, WBP Property Group and regular judge on reality TV Show “The Block” will join Colleen and Bernadette (as mentioned above) at our live events in 2017 – so watch out for the dates!
Our Christmas drinks for clients is on December 3 and if you have done a loan with us you will have hopefully received your invitation by now. I am so looking forward to catching up. Plus, as those of you who know our team will know how much we love a Gin – see below the health benefits of gin! Gin and tonic icy poles and cupcakes will be served on December 3!