Spring has sprung, daylight savings has started and the election is behind us… well nearly!
More houses are coming onto the market with the turn in the weather and the property market is headed for a much-needed boost.
Interest rates are holding steady and in recent weeks we have even seen the reduction of two and three-year fixed rates by some banks. And while we are looking at positives, our biggest bank is still providing generous cash contributions for new mortgages even though some of the other banks have pulled back on this practice.
On the down-side, lending criteria is still quite tight making it harder for some applicants to obtain mortgage approval and we also still have the LVR restrictions in place which require purchasers to have a 20% deposit to buy a home. This and very high property prices are certainly making it difficult for first home buyers.
Options and Choices
Now more than ever, having access to a selection of lenders is very important as not all lenders are subject to the Reserve Bank restrictions imposed on our main trading banks.
An example of this is where one of my clients recently wanted to buy a property that they were not going to live in initially. (they intend to live in it eventually but in the next few years they are going to be living overseas due to one of them having a great work posting in a U.S. University.)
As it is being purchased as a rental property, they need a 40% deposit!
They had saved 20% and when all the banks that they approached turned them down they were referred to me by another client who I had helped out in a similar situation. I was able to find a non-bank lender who could provide 80% against a rental property.
This was done as 70% Interest Only for the first 5 years at normal bank rates and the other 10% Principle and interest over 10 years at finance company type rates.
The rental income will cover the costs while the clients are away and they are very happy to be able to get into the property market before they head overseas and have a house to come home to in a few years’ time.
This is just one example of how I have been able to assist people who may find themselves outside of the criteria of the banks due to the current climate of controls and restrictions. If you know someone who would like to discuss their situation to see if I can offer a solution, please do not hesitate to contact me.