What a 12 months it has been in the finance and lending world! If you have applied to finance a new home or investment property, chances are you will have come across much stricter lending practices...
Only 3 Australian home loan products advertise the opportunity to buy a property sans deposit, compared to 653 similar products last year, according to financial comparison website RateCity.
RateCity research found lenders had tightened their lending criteria almost across the board since February this year, at the peak of the global financial crisis.
However, RateCity chief executive Damian Smith noted it still wasn't impossible for homebuyers and investors to borrow at a high loan-to-valuation ratio (LVR). He said lenders were just less publuc about advertising loans covering most of the cost of a property.
"Lenders will judge on a case by case basis and certain investments with good risk may be accepted,"he said. Restrictions on who could borrow at a high LVR were also tighter than last year.
"For instance, a loan may have an advertised maximum loan-to-value ratio of 95% but it is only available to existing customers who have a credit facility - a credit card or personal loan - with that bank," Smith said.
Following the introduction of the Federal Government's First Home Owner Boost late last year, many lenders also changed their definition of 'proven savings' to be a minimum 5% deposit of genuine savings, excluding the government grants or boosts, Smith noted.
"This means that borrowesr need to show a regular pattern of savings or a 5% deposit untouched in their account for at least 6 months.
There are still options out there for higher LVR loans. Just talk to a Go Mortgage consultant on 1300 855 244.
Thursday, 29 July 2010
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