subscribe to our newsletter sign up

Property investors should stay positive about borrowing

James Grima, Optiwealth, property investing, investment loan, lending, borrowing, APRA

Changes to how lenders are allowed to loan money to investors has made borrowing more difficult and more expensive, but if the property is right for the investors they shouldn’t be dissuaded.

A number of major lenders in the market have reduced their lending value ratio to 50 per cent as part of a move to constrain investing, and the gap between the interest rate on interest-only and principal and interest loans is now large enough to offer as much as a 70-basis point saving depending on the lender, according to James Grima.

Mr Grima, a managing partner for mortgage and finance at Omniwealth, said these changes “are making it more difficult for borrowers to refinance their loans”, especially for those seeking interest-only repayments.

“There is not enough financial incentive for these clients to change lenders, unless they opt for principal and interest repayments,” he said.

However, Mr Grima said investors shouldn’t be put off buying a suitable property despite the increasingly difficult borrowing environment.

“On the positive side, lenders are offering very attractive rates, fixed and variable, for principal and interest loans secured by owner-occupied property,” he said.

“The interest rate difference between interest-only and principal and interest only loans is approximately 30 basis points and for this reason an increasing number of clients are choosing to change their repayments to principal and interest.”

Property investors should stay positive about borrowing
nestegg logo
subscribe to our newsletter sign up
FROM THE WEB
Recommended by Spike Native Network
Pete - Meanwhile, over at Apple and Amazon.......
Dave Shegonnacrash - Is that the tall poppies that pay your wages or fees? When tall poppies fall, jobs vanish quickly. I will be cutting a few jobs when the crash comes........
Anonymous - It is time that we had a Roya Commission just into those dreadful government departments who appear to do everything to protect the perpetrators and.......
Ross Cardillo - And i ask the question again, who is going to jail from Commonwealth Bank for their actions? They should be sharing a cell with their mates at ASIC
....