Do some banks still offer 95% investment loan?

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Otto Dargan
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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

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
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

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
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

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