How to Buy an Investment Property without A 40% Deposit
You may be aware that the New Zealand Reserve bank has changed the rules for lending on investment properties.
Essentially, banks cannot lend more than 60% for a rental property to more than 5% of their total lending.
The changes do not kick in until 1 September 2016, but the banks are applying the potential rules right now.
In fact, most of the banks are not lending on any rental properties over 60% right now, as they are kowtowing to the rules beyond what they even need to.
Come 1 September it is hoped that the banks relax a little and still allow for some lending over 60% on rentals but we will have to wait and see.
So if you want to buy a rental and don’t have 40%, what do you do?
Well these rules only apply to banks, so non-bank mortgage lenders are exempt (currently).
Right now I have at least 3 lenders who have good rates and are keen to lend to investors.
While the rates are higher than the banks, we are still able to get sub 5% in some case, and definitely sub 6%.
You would need to check your numbers, of course, to make sure it still stacks up, but if you find a good property, don’t let it go to waste due to the deposit.
If you need to use your home to take out equity to be able to buy the rental, that’s easy too.
This is a case where advice and using an experienced adviser is critical, so you know what you are getting into, how to get out and what the numbers look like.
Don’t hesitate to ask us any questions you have and share this with anyone you know wanting to look at investment property.