In an attempt to slow down investor lending, the Australian Prudential Regulation Authority (APRA) have given directives that have led to lending changes for property investors.
As a result, the lending process may become more complex for property investors and has raised the question about whether investors now more than ever need the assistance of a mortgage broker.
Changes some lenders have implemented include:
Stress test rate increase:
Due to the lending guideline changes, the stress test rate has been increased to a minimum of 7.5% which can be over 3% higher than current rates. This increased rate is being applied to both the current loan being applied for as well as any other investment or owner occupied loans the borrower may have. This in effect reduces the amount you can borrow.
Some lenders have capped loan amounts for investment properties at 80 per cent LVR (Loan to value ratio). This means that investors will have to contribute more of their own cash or tie up more of their equity for each subsequent property purchase. This change however has not be applied across the board and there are some lenders who will lend over 80 per cent of the property’s value.
Increased interest rate:
Depending on the lender, investors may no longer receive a discount on new property loans, even if they have a large investment portfolio. Some lenders have also increased the interest rates on their investment home loans both for new loans and existing investment loans.
As you can imagine, these changes can make it difficult to navigate the lending maze and find a suitable home loan. This is why some investors are turning to mortgage brokers for professional advice. Mortgage brokers can do the hard work for you and provide you with information on a range of different lenders and what their requirements are. However, keep in mind that a broker will only identify the changes for lenders that are on their panel. To source options outside of this will require your own research.
Although a mortgage broker can help with options, there are a number of things you can do yourself to find the right home loan for you:
Research comparison websites
Comparison websites are extremely handy when it comes to researching home loans. The basic home loan information for a number of different lenders is shown side by side, making it easy to compare. Some comparison websites even have comparisons specifically for investment home loans. Looking at these will give you a quick rundown on what each home loan has to offer and then you can start to narrow your choices from there. Look specifically at lenders outside your broker’s panel to give you an idea of what is available across the market.
Chat to individual lenders
Being hands on is a great way to find the best home loan for you. Most online lenders have the ability to chat you through your options over the phone, so you can do a lot of research when it suits you from home. This is also a way to get to know the different levels of expertise offered and the level of customer service that each offers.
At State Custodians, we work hard to find solutions for borrowers. If you are an investor and need advice across the board, State Custodians can help. We have experienced Lending Specialists who are there to provide personalized assistance. They can recommend a State Custodians loan or loans from 25+ lenders on our lending panel.
Give our expert Lending Specialist team a call on 13 72 62 or leave your details here and they will contact you.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan
Anouska Linz is Manager, Online Sales at State Custodians and has over 10 years’ experience in financial services, both in broking and banking. Holding a bachelors degree in accounting, Anouska quickly discovered a love for mortgage lending and assisting people to achieve their home ownership goals. She leads a team of highly experienced lending specialists who are passionate about finding lending solutions which result in real wins for the customer. She is also a massive netball fan.
For more information on our home loans, visit www.statecustodians.com.au or call 13 72 62.