For a while it appeared that the introduction of the 60% LVR rule for investors would make the property market easier for first home buyers. However, as per this article in the Herald and these statistics from the Reserve Bank, first home buyers are finding it difficult as well.
The 60% LVR rules have certainly made it much harder for investors, with lending sitting at around 50% of the levels from 12 months ago. Through increased client enquires in our business, speaking at events like Gilligan Rowe’s Property School (which continues to sell out every month), and general interest elsewhere, we have been seeing that demand for investment funding is still there; it is more the availability of credit that is causing issues.
While we would generally always recommend banks as a first port of call, for those of you who are finding the current restraints hard to get around it may be worth looking at non-bank options.
At this stage, the options I mention below will mainly assist relatively new investors who:
• are looking to purchase anywhere between their first and third investment property
• have strong servicing
• are finding the required equity levels to be the challenge.
There are three non-bank options where it is still possible to get funding up to 80% LVR for investment purposes. Each lender has their own idiosyncrasies such as:
• One will not lend in Auckland or Hamilton and requires borrowing in personal names – we can work alongside GRA to still make this work for you. (They have structures that help you manage this arrangement which are very investment and tax savvy.) • Another will do standard rates up to 70% but will use a combination loan to take funding up to 80%. The second portion is more expensive but the numbers can be made to work if you purchase well or are creating a good level of equity through renovations.
• The third requires you to also hold your owner-occupied property with them to fund investment lending to 80%. This is normally not what GRA or Kris Pedersen Mortgages would recommend but we can discuss with you what your likely risks are and it may still be a workable opton for some people.
If you are wanting to invest and are finding that lack of equity is holding you back, we are very experienced in this part of the market. For a no-obligation chat please click on this link, fill out the form, and we will be in touch.