Investment Property Lending Restrictions - The Issues and the Solutions
The Reserve Bank Restrictions (RBNZ) which have impacted on investment property lending have been in place for over a year now. That change, for those that may not recall, is that for loans relating to investment property lending, the banks will now only lend up to 60% of the value of that property.
Many clients see these restrictions as a roadblock to buying other property, topping up their mortgage to do renovations, buy a car, or even selling a home due to sellers potentially receiving less cash out of the transaction as they expected.
There are solutions though, here is a quick snapshot:
Buy a new build as an investment rather than an existing home- some banks will lend up to 90% on these
Use a non bank lender. I have access to a non bank lender who will lend up to 80% on a rental property as long as the owner occupied home is also being used as security. At the time of writing, the 2 year rate was 4.95%, which is a very good rate for those wanting to work outside the RBNZ rules imposed on the main banks
With the banks weighting the lendable value of your investment property to 60%, I am seeing clients looking to borrow for renovations or a car and being told that due to them owning a rental property they no longer have the equity to do a top up. The rental is weighing down the lendable value and stops lending occurring. The good news is I can offer personal loans and car loans which will provide a solution - rates start at 9.95%
Refinancing your rental property loan if it’s currently held at the same bank as your owner occupied property - the RBNZ has allowed what is called $ for $ refinances to occur and are exempt from the RBNZ restrictions. Some banks allow this, others don’t. We can move the rental away to a new bank at up to 80% of its value, then that will leave only the owner occupied home with equity in it to borrow against again. Or if you sell the owner occupied you will have more cash at the end of the process, rather than being forced to repay investment lending debt.
The market is complex but there are often solutions. Please get in touch to discuss your personal situation, I’m always happy to help.