The importance of a knowledgeable mortgage broker has come sharply into focus following the recent banking system changes to investment loans.
Many panicked borrowers have turned to mortgage brokers like us, for guidance in the months since the Australian Prudential Regulatory Authority (APRA) directed the major banks to place limits on investment lending and hold more funds in capital reserves.
With each bank responding individually to the directive, the changes in policy and pricing have varied wildly from one lender to the next. There has been confusion among borrowers and concern about how current and future investment lending is affected.
Investment loans affected by the APRA changes
If you fall into any of the below categories, you may well be affected by some of the changes.
- First time investor who had planned on getting into the market with a high loan to value ratio using mortgage insurance
- Seeking investment loans without a 20 percent deposit
- Off the plan property investor who has paid a 10 per cent deposit, with plans to finance the remaining 90 per cent of purchase price on settlement
- Existing investor with a variable loan
- Investor with multiple properties with plans to release equity to purchase another property
- Investor with high levels of SMSF lending
- Investor trying to maximise borrowings or with plans to refinance investment loan
Seek advice from your mortgage broker
With all these changes and still more to come, it’s little wonder that borrowers are turning to mortgage brokers. While banks can in some cases only offer one solution, a broker with 25-30 plus lenders on their panel and years of inside industry experience can provide a number of solutions and recommendations.
A knowledgeable mortgage broker can make the world of difference to which direction you take with your investment. Here are just some of the tips we give our clients.
Non-banks do not currently have the same restrictions on investment lending and have become a popular alternative for investor activity.
Some people don’t realise their loan type is ‘investment’ and are now paying a higher rate of interest for no reason. It commonly happens when you initially purchase your home as an investment property, then down the track move into it but never change your loan type from ‘investment’ to ‘home loan’.
Some lenders will bend their lending guidelines or offer you a better deal if you are in a ‘preferred’ occupation such as a doctor, dentist, pharmacist, legal professional or teacher.
The less you borrow, the more lenders will be inclined to approve applications for investment loans. Aim to boost your deposit through savings or by reviewing your current assets.