This week The Reserve Bank has introduced new lending rules that make it harder for many Kiwis to get property investment loans from the banks, but non-bank lenders will be ready to help out through the broker network.
While many new property investors might think this has made it too hard to finance a rental property, many will seek alternative options and that is where mortgage brokers with non-bank options will be able to help.
Low Deposit Property Investment Loans
The new loan to value rules state that a borrower needs to have a deposit of 40% when they are purchasing a rental property – at least when financed with a bank.
The good news is there are non-bank lenders that are not regulated under the same set of rules and can therefore continue to offer low deposit property investment loans.
A lower deposit of 20% means you need just half what you would for a bank loan and the interest rates available are good too. Resimac Home Loans is one of the most popular non-bank lenders operating in New Zealand and they offer competitive interest rates with some advantages that make them a popular choice for property investors.
You can now get non-bank property investment loans at under 5% when fixed for 1-year or 2-years and you can have just a 20% deposit which is half what the banks require.
You can get an even lower 10% deposit, but the interest rates are higher.
Non-Bank Lenders Have A Different Focus
The non-bank lenders generally do not compete directly with the banks, but instead focus on things that banks do not do well.
In New Zealand we do not have many non-bank lenders, but the ones that we have means the mortgage brokers that understand the various options will generally be able to source finance for people.
Low deposits is one area where non-bank lenders can help, offering both low deposit home loans and low deposit property investment loans.
They can also help with some other non-standard home loans like home loans with bad credit, low doc home loans where proving income is difficult and even helping where people have tax arrears or behind with mortgage repayments.
Of course banks cannot offer all of these options, and many New Zealand mortgage brokers do not have the expertise or experience either.
Which Mortgage Brokers Are Experts?
The advisers at The Mortgage Supply Company have a lot of experience with working with and financing property investors portfolios. Stuart Wills is an adviser working from the Hobsonville office and is renown for his ability to finance those deals where the banks say “NO” and many other mortgage brokers shy away from.
Unlike home owners, property investors are more focused on making the numbers work in the same way a business does. In addition it is important for investors to have the flexibility especially when growing a property investment portfolio.
It has never been more important to have a professional mortgage broker on your team!
