Banks Change, so should we?

Over the past couple of weeks, Banks have introduced lending policy changes that could have major impacts if you are looking to finance a new residential owner occupied or investment property, or refinancing an existing residential mortgage.

Some of these changes include:

• Limiting interest only loans to 80% Loan Valuation Ratio’s
• Applying higher interest rates to interest only lending
• Ceasing rebates when refinancing interest only loans
• Not accepting Interest Only repayments for Home and Investment Construction Loans once completed and the loan has fully funded.
• Maximising interest only periods to 5 years

1. Firstly check what interest rate your loan is on. If it is over 4.50% your maybe paying too much.
2. Ask your lender for an interest rate discount. Whats the worst they can say!
3. If either of the first 2 points don’t succeed, work out if the budget can afford Principal and Interest loan repayments. Loan rates can be approx. 0.20% lower then interest only loans.
4. Refinance to an alternative, cheaper and more flexible lender.