What the changing finance landscape means to property investors [Video]

Are the tighter lending criteria holding you back?

Well…you’re in good company as the majority of respondents our recent Property Sentiment Survey said that the stricter serviceability criteria were an issue for them.

Over the years I’ve realised that real estate investing is a game of finance, with some properties thrown in the middle.

But the problem is the finance landscaping is changing before our eyes, so to help you get an understanding of what’s going on I had a chat with finance strategist Andrew Mirams to see what this means for property investors.

12 Things Property Investors Need to Know About the Changing Financial Landscape

1. Servicing restrictions have been applied and regulations are being put into place to slow down the property financing markets.    
2. The banks serviceability model takes into account how much you earn and how much you spend. Or more correctly how much you could spend, even if you don’t! 
3. Affordability – because of the current low interest rate environment, banks want to ensure you can afford your repayments if interest rates increase so they stress test your affordability.
4. Interest only loans are still available, but they’re harder to come by. 
5. If your interest only loan period is up, you’ll need to reassess your options – maybe it’s time to swap banks. 
6. A property portfolio is about building your asset base and having good debt is not the worst thing in the world. 
7. The same rules apply for loan-to-value ratios as have for the last few years, but they are just a little bit tighter.  
8. Sometimes it makes sense to pay principal and interest if the payment differential is not great.
9. If you are self-employed it’s harder to get loans today so having a specialist help you with financing to meet the bank’s servicing criteria is a good idea.
10. There is more scrutiny on expats. They often have to supply of evidence of their last 6-months income. The servicing requirements are quite restrictive.
11. Banks have implemented restrictions lending to self-managed super funds buying property as they were viewed as distorting the market.
12. Investors shouldn’t be worried just because the interest rates may go up a bit. There is enough regulation in place to make sure safe lending practices are me are met.

WHAT CAN YOU DO TO STAY AHEAD?

As signs point to softer growth conditions for Australian property over the coming months, independent professional advice and careful consideration will be as important as ever in navigating Australia’s varied market conditions. 

If you’re looking for independent advice, no one can help you quite like the independent property investment strategists at Metropole.

Remember the multi award winning team of property investment strategists at Metropole have no properties to sell, so their advice is unbiased.Whether you are a beginner or a seasoned property investor, we would love to help you formulate an investment strategy or do a review of your existing portfolio, and help you take your property investment to the next level.

Please click here to organise a time for a chat. Or call us on 1300 20 30 30.

When you attend our offices in Melbourne, Sydney or Brisbane you will receive a free copy of my latest 2 x DVD program Building Wealth through Property Investment in the new Economy valued at $49.