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.