Q&A: Advice for investors in the current lending market

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As the Australian Prudential Regulation Authority (APRA) encourages lenders across Australia to tighten their markets, especially to investors, some people may be wondering whether it might be best to stay out of the market right now. 

With that in mind, Michelle Coleman from mortgage brokering firm W Financial, has provided Your Investment Property with some expert advice on what investors should be doing in the current environment. 

I want to invest, but it sounds like financing will be hard to come by, should I wait until lenders become more approachable?

Goodness no! It’s always a good time to get into the property investment market.  

If you speak to the right lender and don’t stretch yourself you should still be able to secure finance.

I agree that the current environment paints a negative picture on investment lending, but I believe that the investment finance market is still strong and there are options for investors to continue or start their property investment journey if they are smart about strategy and property selection.

Is it possible to still get a good deal from a lender at the moment?

Yes of course, if you can get an approval to start or continue your investment journey – that’s a good deal.  

The rates are still very competitive and even if there is a higher interest rate margin then that’s ok – as long as the numbers on your purchase work for your situation.  

In saying that we have never selected lenders based on rate for our clients; it’s about the right lender in the right order, depending on personal and financial goals.  

The finance strategy is just as important as the property strategy.

For my past investments I’ve always dealt with lenders on my own, given the current environment would I be better off going with a mortgage broker?

Yes, I would say even more so now than ever.  

The old adage is true - you don’t know what you don’t know – but your mortgage broker will when it comes to solid lending options.  

Each lender even before the recent changes had individual policy niches that you need to understand to make sure that your finance application is successful.

A good mortgage broker will look at all lenders, including the ones you are with now.  

Using a mortgage broker doesn’t mean you can’t use your current lender, but it does mean you’ll gain insight into the full spectrum of options for your situation.

Whereas your bank won’t tell you what the one next-door can offer you, and it would take a lot of your time to visit each one and thoroughly research their offers.

I’ve found a property I’d like to invest in, given the current environment are there any extra steps I should take before I approach a broker or lender?

Normally I would recommend getting your finance sorted out before finding a property in any environment.  

This is for a few reasons, but ultimately it makes your whole investment journey a lot less bumpy.  

Speaking to a broker first to gain clarity around your borrowing capacity before you commit to a purchase is a wise move; you may find you’re safely able to borrow more, or even more importantly, ascertain if you should be looking at a less expensive property. 

It also allows you time to sort out any challenges that you may encounter along the application path, like credit scoring and genuine savings requirements, and avoid stress over meeting finance clause dates, or locking yourself into a purchase with no finance clause which could be troublesome.

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