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What’s the latest on LVR rules and how much can you borrow for your new home purchase?

On the 1st October 2016 the Reserve Bank applied lending restriction rules for clients who want to purchase both owner-occupied and rental properties. This means that clients purchasing existing properties would need more of a deposit to make this work i.e. usually up to 20% deposit for owner-occupied and 40% for rental properties.

The good news is that there are exemptions to the above rules, with one of these being purchasing a New Build (completed within the previous six months and bought from the developer). If you’re purchasing a new build to live in, you can get away with as little as 5% deposit, and for investors just 20%. This lower deposit amount is significant in comparison to the above lending restrictions and could be the difference between owning a property or not.
 
Since these rules have been implemented I have seen many of my clients purchase new build properties where they wouldn’t have been approved if they purchased an existing home of the same value. On top of that, the obvious major attraction in purchasing a new build is that you are getting all the benefits that come along with this e.g. double glazing, low maintenance, modern materials and chattels etc. 

Not only is this important for clients moving into their new home but for investors too. Investors will find benefit in reduced ongoing maintenance issues that an existing property can have and also won’t be affected by the new landlord responsibilities to be implemented in July 19, i.e. having to have your rental properties fully insulated.
 
To find out more about how you can benefit from these exemptions and get into a new property, please contact Lime Group and talk with an experienced Mortgage Broker today.



 

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