By Stephen McClatchie
We have all become well versed with Reserve Bank Meeting announcements each month and we anticipate the effect this will have on our current loan, or the loan we hope to be approved for.
What is less well known is that APRA, the regulatory body has been moving a few goal posts lately and this has caused many of the banks to change some lending policies, usually to your detriment.
The reasons behind these changes lie in the need to fortify the Australian financial system, particularly on reflection of international woes in certain areas.
It has been ruled that the banks will need to hold more capital as a buffer against potential losses on home loans. Where do you think the banks find this extra cash? – That is the key to many of these changes.
Some Banks have reduced the loan to value ratio for investment lending to re-balance their portfolio exposure to loans which are effectively not getting paid off-ie. Interest only loans. Others have increased the interest rate being charged on investment loans by 0.1- 0.4% as they seek to pass on the cost of raising more capital or setting more capital aside.
So, how can you work around the moving goal posts to kick goals not points? Think smaller lenders that don’t fit into the same regulatory environment, think about maximising your borrowing now, before all of the lenders have acted and think about seeking expert advice from your mortgage broker.
At Loans Australia, we have a large panel of lenders to access for our clients, we have recently even been able to get a 95% loan for an investor client who added the expense of lenders mortgage insurance to the loan amount making the loan more than 95% overall.
This is an interesting point. Fear of paying mortgage insurance is unwarranted if you are trying to achieve greater wealth. Buying and leveraging an asset such as property with a low deposit at least means you are in the market! Change in property prices is enough incentive to understand that waiting is not a good idea.
Loans Australia understands investors who wish to maximise their opportunities today. Waiting for tomorrow clearly means you don’t know what challenges can be thrown up which you don’t have control over.
Founder and Managing Director
B.Com F Fin SAAIMB
SEQUAL Accredited RMC
Grad Dip App Fin Inv (Sec Instit)
Dip Mortgage Lending(Sec Instit)
Suite 3, 81 Beach Rd
Sandringham VIC 3191
PO BOX 94,
Hampton VIC 3188
P: 1300 855 430
F: 1300 855 400