Changes in lending policies for investment loans

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airenwaren
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Joined: Thu Jun 27, 2013 9:21 pm

Changes in lending policies for investment loans

Postby airenwaren » Mon May 18, 2015 7:19 am

Hello there,

I’d applied for an investment loan with one of the major banks a few weeks back. However, they blatantly rejected my application even though I was sure I’d met all of their requirements for the loan.

They tried to avoid giving a reason at first but after I insisted, I was told that it was because of some change in the policy. The guy at the bank said he was busy and couldn’t waste time explaining.

I’ve turned to this forum because a friend spoke very highly of it and said that I’d definitely find some answers here. Can anyone please clear me up on these policy changes for investment loans?

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Otto Dargan
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Re: Changes in lending policies for investment loans

Postby Otto Dargan » Mon May 18, 2015 10:14 am

Hi and welcome to the forums airenwaren.

Here are some of the major changes in the lending policies for investment loans:
  • Higher interest rates: Some of the major lenders are increasing the interest rates for investment loans. Some recent examples are Commonwealth Bank (CBA) cancelling pricing requests for investment loans, and Macquarie increasing rates for investors.
  • Larger deposits: One of the major lenders just announced that they will be lending only up to 80% of the property value for investment purposes, effectively immediately. They had been lending up to 95% of the property value not long ago.
  • Decreased borrowing power: Several lenders have changed the way they assess a borrower’s capacity. Some lenders have increased the interest rate that they use in the assessment of a loan application. Some have decreased the amount of rent they use, while others no longer use negative gearing benefits in their assessment.
  • Changes for foreign investors: Two major lenders recently announced that they are reducing their foreign investor loans from 80% of the property value down to 70%.
However, it should be noted that not all lenders are making these changes. Although the major lenders and lenders that have a large share of the investment market have made the changes, the smaller ones have not yet done so.

Cheers,
Otto
Otto Dargan
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airenwaren
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Joined: Thu Jun 27, 2013 9:21 pm

Re: Changes in lending policies for investment loans

Postby airenwaren » Mon May 18, 2015 11:13 am

Oh, I get it now. Thanks for your quick reply. So what do you suggest I should do now?

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Otto Dargan
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Re: Changes in lending policies for investment loans

Postby Otto Dargan » Mon May 18, 2015 2:18 pm

Hi airenwaren,

It is recommended that you act as soon as possible regardless of whether you own an investment property or are planning to buy one. If you own an investment property then you may try to find a competitive interest rate before all lenders increase the rates on investment loans. This may be your last opportunity to get a competitive rate.

If you plan to buy an investment property then it may be best if you get pre-approved now. You may then have up to three months to find a property.

If you purchased an investment property off the plan, then you must speak to a specialist broker to assess your situation because lenders may not approve your loans as easily after these changes in policies.

If you want help to find the most competitive interest rate or get approval on your loan, then you can speak with one of our expert mortgage brokers by calling us on 1300 889 743. You can also fill in our free assessment form and one of our brokers will contact you instead.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

airenwaren
Posts: 41
Joined: Thu Jun 27, 2013 9:21 pm

Re: Changes in lending policies for investment loans

Postby airenwaren » Mon May 18, 2015 7:21 pm

I understand why my friend speaks so highly of you guys. You guys are so quick to answer, and your answers are in so much detail. I need to buy the investment property regardless of these policy changes. I’ll need your help in finding the best solution so I’ll give you a call tomorrow afternoon.

Cash Warren
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Re: Changes in lending policies for investment loans

Postby Cash Warren » Wed May 20, 2015 10:19 am

Hello there,

I was searching for answers regarding the policy changes for investment loans. This thread has answered many of my questions. I still have a question that I want answered.

I bought a couple of properties off the plan last year. Two days ago, I heard about the policy changes through a friend and I have been restless ever since. What will happen to my loan now that these policy changes are in effect?

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Otto Dargan
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Changes in lending policies for investment loans

Postby Otto Dargan » Wed May 20, 2015 1:27 pm

Hi Cash Warren,

Your loan may still be approved. However, it may be decided only after assessing your situation. In the worst case scenario, if your loan is still not approved then you may not be able to complete the purchases of the properties that you bought off the plan.

You may lose all your deposit on those properties and may also be sued by the developer for not completing the contract. This is why you have to act as soon as possible and call a specialist mortgage broker now.

If you want help in finding the most suitable solution for you then you can give us a call directly.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Cash Warren
Posts: 43
Joined: Thu Jul 25, 2013 6:54 pm

Re: Changes in lending policies for investment loans

Postby Cash Warren » Wed May 20, 2015 8:21 pm

I’m definitely in a difficult situation. I’ll need all the help to get out of this mess. I’ll give you a call early in the morning tomorrow.


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