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Don’t take no for an answer

There is no doubt the lending environment has changed for investors but that doesn’t mean they should give up on trying to get finance to build their portfolio.

Tuesday, February 28th 2017, 3:00PM

by Miriam Bell

With the Reserve Bank’s latest investor-focused LVRs firmly in place along with the banks’ tightening up on their mortgage lending, there are now more challenges for investors seeking funding.

At a recent finance strategy webinar, the Mortgage Supply Company’s David Windler said the current “interesting” environment means that finding lending solutions has got a bit tougher.

Stories of the roadblocks investors are now encountering abound.

These include banks being unwilling to give more equity, shifting the numbers, querying the purpose of the borrowing, changing the target or simply not getting it.

But it is still possible for investors to find a funding solution which will allow them to take advantage of the opportunities out there in the quieter market, he said.

“Don’t let a no from one bank put you off exploring the options with a whole variety of other lenders. Remember that different banks treat factors like income differently.”

When looking to get funding, investors need to analyse their current portfolio and asset situation, forecast their borrowing needs, and then drag out any trapped equity.

Windler said that releasing trapped equity can make a huge difference for investors but many are not aware of how to access it.

One way investors can access trapped equity is by getting a property revalued in the current market.

Another way is for an investor to look to their home rather than an investment property – because with an owner-occupied property it is possible to get 20% more leverage.

There is scope here for solutions that many people don’t know about, he said.

“Making use of the bach is one. If you have a holiday home and it is not rented out for more than 32 days a year, it is classified as owner-occupied and that means the LVR on that property is 80%, not 60%.”

Boosting, or creating greater, equity in an existing property, including a home, by renovating or sub-dividing is also a useful strategy to employ.

However, if wanting to move quickly, investors need to know whether a bank will let them access newly created equity right away as some banks have a six month hold on releasing it.

Good mortgage advisers have an intricate knowledge of all the banks’ different funding policies and criteria and that’s where they can really help out investors in the current environment.

Windler said an adviser’s responsibility is to help an investor establish how to access their equity most effectively and then find them the right lender to use it.

“There are all sorts of factors that can make a difference to the equity an investor has to work with. We just need to find the right key to unlock these things.

“While the goalposts have shifted in the current environment, they haven’t been thrown out of the grounds.”

The quieter market means there is more stock available and less competition for it – and that means opportunities for investors.

But using advisers to navigate the current lending environment to access those opportunities can make a big difference for an investor, Windler said.

Read more:

Finding solutions to 60% LVRs 

« OCR hike expectations premature OCR decision: 'Nothing to see here' »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 4.05 3.95 4.39
ASB Bank Special - 3.55 3.45 3.89
BNZ - Classic - 3.55 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 ▼4.14 ▲4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - ▼3.39 ▲3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - ▼3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.34 4.04 4.09 4.39

Last updated: 15 November 2019 4:16pm

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