Has your interest rate just increased on your investment loan?
Have you recently received a letter from your bank advising of the increase?
If not, it’s likely you will be receiving it soon!
The Australian Prudential Regulation Authority (APRA) have recently made it clear to banks that they want to reduce the volume of lending to investors. To achieve this they have provided new guidelines for lenders.
The good news is however that the new laws do not affect all lenders equally.
Some lenders are being forced to increase the interest rates on investment loans yet others are still offering very competitive deals and actually lowering rates for investors.
There has always been a compelling case for the use of brokers but recent changes now make it even more pertinent. And speaking to many in the industry it is highly likely the discrepancies between owner occupied loans and investment loans is only going to get wider.
Other changes to investment loans I have seen in the past few months are:
- The amount of rental income included in servicing the loan. I have seen lenders use 80% of the rental income, but now only allow 50% of the rental income allowed for servicing.
- Investments Loans are generally tax deductible so in the past most lenders would calculate into your loan the tax benefits of negative gearing. This is no longer for most lenders.
- The amount you can borrow has also changed. When previously you may have been able to borrow 97% of the funds required some lenders are now only lending up to 80%
- We have also seen changes for home owners as well with Interest only loans being taken of the table in certain circumstances.
So how does the recent changes to investor loans impact you:
If you sit on your hands it’s likely to start costing you money or you will find that goal to get into an investment property gets further away.
You may have even been declined for a new investment loan due to the changes.
If you would like to make sure you are getting the best deal and the best advice than don’t hesitate to call us.
Or simply contact us through the form below and let us know the best time to give you a call back.