Investment Property loans have always been sought by both New Zealanders and Australians, who see that a way to plan for their financial future is to accumulate one or two residential rental properties, which they can add to over time, to become significant rental investment property portfolios.
Whilst Banks have in the past lent to 90%, the rules changed, firstly to 70% just in Auckland then to 60% across New Zealand. This is driven by the Reserve Bank who wish to slow down rising property values. But there are still Non Bank options to 80%!
Now, what we are seeing is many investors being blocked by their Bank from buying further properties; as they are already beyond 60% with existing rentals and the Banks require reduction of rental debt below this level prior to considering further lending.
Some of the options that are available to help you buy a rental property at 80% are:
Have your Home Loan and Rental funding with one Non Bank lender and we can apply for 80% lending across both your home and rental investments. Interest rates are comparable with a Bank. A requirement is though, that all properties (home and rentals) must be in the same ownership structure, such as Personal, Company or Trust.
A first and second mortgage to allow you to settle on the rental. In this instance, the first mortgage to 70% could be interest only and the second, which will be at a higher rate, on a shorter term to allow you to pay this down quickly plus with no penalty for lump sum reductions. Refinance and consolidation at a lower interest rate could also be considered after say 12 months, dependent on criteria applicable at the time.
If you are buying your first or second rental in personal names outside of Hamilton and Auckland an 80% first mortgage may be available.
If you have substantial equity in your home, we can use this equity to allow you to start funding up to 100% on rentals, with your current Bank, or look to release equity to start a relationship with a new Bank or Non Bank lender. This would however then be subject to 60% to 80% restrictions.
Some key criteria if you wish to borrow for a rental purchase are:
Legal and Tax advice are also critical initial steps, which we would recommend, but once you are comfortable with the direction you are taking, we can help you with advice on obtaining your first or next rental investment loan.
So, if you are having trouble finding sufficient deposit with your Bank to allow you to purchase a residential rental investment or it is just too tough as you already have multiple rentals or offshore income, you may find a Non Bank option is right for you.