Your Loan Approval May Not Be Worth the Paper It Is Written On

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Over the past few days the banks, prompted by regulators, have made it more difficult to get an investment loan.  So, you may want to get a second opinion on whether your loan approval still stands.


Here is what has happened

Prompted by pressure from the Australian Prudential Regulatory Authority (APRA) to limit property investment growth to 10 per cent per annum, the banks have announced new lending policies which will make it just a little tougher for investors to get a property loan.


All banks have announced different policies, but here are some examples of what has happened


Westpac only takes into account 60 per cent of rental income when assessing an applicant’s income

NAB no longer discounts interest rates for investors

Macquarie has introduced a tougher test to calculate if borrowers can make repayments

Bankwest now only lends up to 80 per cent of the value of an investment property (was 95 per cent)

AMP no longer accept all of rental income when assessing an applicant’s income

The Chan & Naylor Finance team are being updated on almost a daily basis by banks that are changing their lending policies.

What it Means

If you are currently looking to buy an investment property and (believe) you are armed with a bank pre-approval, it may no longer be valid.


What Should You Do?

Contact your broker immediately to double-check how much you can borrow


What You Should Not Do

Do not sign a contract on an investment property until your broker tells you that you are on safe ground.

Related:  How property investors will be affected by the new rigid loan application review


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