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How investors are avoiding the crackdown

By James Mitchell
23

A high-profile property industry identity has given an insight into how investors are overcoming new restrictions on their portfolio’s expansion resulting from the lending crackdown.

Non-bank and specialist lenders are fast becoming the new funders of investor home loans in the wake of APRA’s lending crackdown.

Mortgage brokers are finding alternative sources of finance for their investor clients as the banks pull back on landlord lending with stricter serviceability requirements and higher LVRs.

Sydney-based broker and CEO of Multifocus Properties & Finance Philippe Brach told Smart Property Investment’s sister publication The Adviser that the group is shifting its strategies when setting up structures for its investor clients.

“We used to use the big four banks a lot as pricing and products were unbeatable,” Mr Brach said.

“Nowadays, we tend to shift some satellite loans to mortgage managers such as Mortgage Mart or AFM, who are not taking deposits from the public and have access to funds from different sources at reasonable rates and at much better servicing levels,” he said.

Mr Brach provided one example of a client who is an experienced investor and wanted to finance his next property.

“He can borrow about $200,000 from the majors today, whereas using a mortgage manager who will take existing debt at actual repayments for servicing, he can borrow $800,000,” he said.

Smartmove co-founder and director Simon Orbell said his Sydney brokerage is already starting to use specialist lenders for investor loans.

“Just in terms of that more unique approach that some of the smaller players with a more nimble approach can take towards serviceability and some of the credit policies and niches they create,” Mr Orbell said.

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