Do some banks still offer 95% investment loan?

Learn more about investing in Australian real estate & share your ideas with other investors.
Post Reply
aussie
Posts: 8
Joined: Thu Mar 12, 2015 5:45 pm

Do some banks still offer 95% investment loan?

Post by aussie »

Hi home loan experts,

I started working as an assistant manager in a supermarket about a year ago. I currently earn $40,000 per annum and I’ve been promised a raise at the end of the this year. I’d like to buy an investment property because I’ve always wanted to get into property investing and I think I’ll be able to afford the mortgage repayments now.

The problem is that I may not be able to provide a big deposit as of yet. One of my friends borrowed at 95% a few years back but it seems that his bank doesn’t lend at 95% anymore.

Is there any other banks that still offer 95% investment loan?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7729
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Do some banks still offer 95% investment loan?

Post by Otto Dargan »

Hi and welcome to the forums aussie.

There have been recent changes in investment policies, due to which borrowing 95% of the purchase price to buy an investment property is now available only through a handful of lenders.

You can invest in a property by borrowing with one of those lenders, however, you must meet some criteria such as:
  • Your deposit: Most lenders require you to have saved 5% of the purchase price but some of our lenders will allow for your deposit to come from equity in another property, a personal loan or a gift from your parents or a close relative.
  • Investment portfolio: Some lenders will only allow you to borrow 95% Loan to Value Ratio (LVR) if you have equity in another property. However, exceptions can be made.
  • Negative gearing: Only some lenders take negative gearing benefits into account so you’ll need a strong income.
  • Credit history: Your credit file should be clear of black marks including defaults, judgments, bankruptcy and too many credit enquiries.
  • Employment: Being in your current job for 6 to 12 months is a requirement for most lenders but not for all of them.
  • Your investment property: Lenders prefer standard properties in capital cities or major regional locations however some lenders can consider exceptions.
Many Australians have been locked out of the property market as a result of the investment policy changes. Despite this, it’s still possible to get a 95% investment loan. It is recommended that you talk to an investment broker to help you guide through the process.

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

aussie
Posts: 8
Joined: Thu Mar 12, 2015 5:45 pm

Re: Do some banks still offer 95% investment loan?

Post by aussie »

Hey! Thanks for the info but I’ve got no idea what negative gearing is. Can you please elaborate on that?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7729
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Do some banks still offer 95% investment loan?

Post by Otto Dargan »

Hi aussie,

Negative gearing means you borrow to invest, but in such a way that you make a loss. While you’re at loss, you’re permitted to claim the net loss as a tax deduction against your other income.

To make this clearer, let’s suppose that you’re earning $80,000 a year and you own a rental property. This property is rented at $20,000 a year and you spend about $30,000 in interest and running (maintenance) costs.

There is a loss of $10,000 incurred from your investment property every year. This loss on your investment property means that your taxable income is reduced equal to the loss amount that you incurred. Your final taxable income will be $70,000.

This reduction will help you save $3,000 that you’d have to pay otherwise.

If you would like to know more about investment loans and negative gearing, then you can check out our website. We can also be reached on 1300 889 743 or you can fill in our free assessment form to see if you qualify for a loan or not.

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

aussie
Posts: 8
Joined: Thu Mar 12, 2015 5:45 pm

Re: Do some banks still offer 95% investment loan?

Post by aussie »

Thank you so much! Negative gearing is a really interesting concept. I’d like to learn more about it. I’m also glad that there still are lenders that give out 95% home loans. I’ll definitely give you a call by next week to further discuss my situation.

superman
Posts: 12
Joined: Mon Mar 16, 2015 6:19 pm

Re: Do some banks still offer 95% investment loan?

Post by superman »

Hi there,

I’m looking to take out a 95% investment loan for my business. This thread here has been an incredible source of useful info. I have a small question though.

Can I get a loan for multiple investment properties at the same time?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7729
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Do some banks still offer 95% investment loan?

Post by Otto Dargan »

Hi superman,

From 2015 onwards, the way that borrowing capacity is calculated has changed. What it means for Australians with multiple investment properties is that they will find it harder to borrow the amount they need.

Previously many banks would taken negative gearing benefits when assessing your serviceability and assess your current debts at the actual interest rate that you’re paying.

Now, few lenders will include tax deductible interest and many will assess your existing loans at a higher interest rate than what you’re actually paying.

Please go through our website to learn more.

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

superman
Posts: 12
Joined: Mon Mar 16, 2015 6:19 pm

Re: Do some banks still offer 95% investment loan?

Post by superman »

Oh, that’s a bit sad but I guess we’ve got to accept the changes. Regardless of this, I still want to buy an investment property. I’d need your help to do that. I’ll give you a call by the end of the week. Cheers!

Post Reply