The Mortgage Supply team is still doing 80% loans for rental properties!
It is true that The Reserve Bank is introducing new rules for the banks that will limit the borrowing to 60% on rental properties, but the Mortgage Supply team have very strong relationships with non-bank lenders that are not restricted by these new rules and therefore can continue to offer 80% loans for rental properties.
Looking At The Big Picture
What is the most important aspect of property investment?
Well of course the answer is going to be different for each of us; however when we are talking about finance for rental properties then two things spring to mind;
- The interest rates
- The amount we can borrow
Interest Rates On Property Investment Loans
In New Zealand we have generally been able to borrow money for residential rental properties at the same residential mortgage interest rates as we would be offered for the home that we live in.
In many other countries a loan of a rental property would be treated like a commercial loan and therefore the interest rate charged would be higher. In New Zealand we may need to now look at non-bank lenders to provide finance for our rental properties, especially if we are looking for 80% loans for rental properties.
But the perception is non-bank lenders have higher interest rates!
Yes, they typically do; however they may not be as high as you would think. If we look at the mortgage interest rates today as an example;
Talk to our advisers and they can show you exactly what this will mean to you and in your specific situation. Non bank lenders are a real alternative with interest rates that are very close to the standard bank interest rates, but with the ability to provide loans of up to 80% still.
How Much We Can Borrow?
The banks in New Zealand are now restricted and can only lend up to 60% for rental properties, but there are other non-bank options where you can get up to 80% and sometimes even more than that.
The issue with needing such large deposits is that it restricts how much you can spend.
If you purchase a rental property for ‘say’ $600,000 then a 40% deposit is $240,000, but if you only need a 20% deposit then that same $240,000 means you can buy properties worth $1,200,000.
We all know that over time property values increase, and therefore you need to decide what is more important – having property worth $600,000 that may increase by ‘say’ 5% over the next year which means a gain in values of $30,000, or property worth $1,200,000 where the same 5% gain in values equals $60,000.
Maybe the properties won’t increase by 5%, but maybe they will increase by more…
Other Advantages Of Non-Bank Lenders
For property investors there are other advantages of non-bank lenders that are of course rarely mentioned by banks and unfortunately very rarely mentioned by many mortgage brokers who are probably ex-bankers themselves and may not understand what might be important to property investors.
- Most non-bank lenders will not take cross-securities when there are more than one property. This is exceptionally important today with all of the changes that are impacting borrowers.
- Most non-bank lenders do not require you to have a transactional bank account or other products with the bank. This keeps things more simple to manage and saves on bank fees as everything can go through the one bank account.
Speak To The Mortgage Supply Team
The mortgage brokers (advisers) that are The Mortgage Supply team are experienced with financing residential property and unlike many brokers they have the expertise with sourcing and structuring loans for rental properties.
They are recognised by the lenders for being professional and that is one reason why they can continue to offer 80% loans for rental properties.
When you work with an adviser from The Mortgage Supply Company you can be assured that you are dealing with one of the best New Zealand mortgage brokers.
Talk to the team that can help:
