Can I still get an Investment Loan with 10% Deposit?
You may have heard a lot in the press lately about a crack down on investment loans by APRA. That’s the Australian Prudential Regulatory Authority and it’s their job to keep an eye on the banks and make sure they are behaving responsibly, and not about to get into financial difficulty. Not a bad idea if you think about the impact of a bank going out of business.
So what’s all the fuss about? Well, APRA are forcing the banks to limit the growth in investor loans to no more than 10%. This is under the actual growth levels with most banks. In fact in the year to March 2015 investor loans surged by 12.4% according to APRA. The worry is that this may lead to riskier loans and could also be pushing property prices up.
In response the lending industry is taking action. Some lenders are insisting on up to 20% deposit if you want to by an investment property. Previously this was up 10%. Other’s are reducing the discounts and / or increasing interest rates for investor loans.
What this means is that you should speak to your Licenced Finance Broker before you go ahead and sign up for an investment property. Even if you have the 20% deposit, which most investors do, you need to make sure you are getting a competitive interest rate.
There are still plenty options out there for investors but if your bank won’t come to the party it’s time to speak to a Licensed Finance Broker.