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More cash flow: Investors can now access 15-year interest-only loans
The major bank has updated its investor lending products, extending interest-only terms and increasing the maximum loan-to-value ratio (LVR) for eligible borrowers.
In an email seen by Smart Property Investment, Wespac has announced an increase in the maximum interest-only term on eligible investor loans from 10 to 15 years for loans up to 80 per cent LVR.
The bank said that the changes will provide investors with enhanced flexibility for cash flow, portfolio management, and investment planning.
While the changes will apply to both new and existing customers, they will exclude certain products, such as lenders mortagge insurance (LMI) waiver loans, bullet loans, National Rental Affordability Scheme (NRAS) transactions, and loans with lower interest-only (IO) caps.
Additionally, Westpac has increased the maximum LVR for Investor Principal & Interest (P&I) loans with LMI from 90 to 95 per cent, removing the requirement for investors to provide an additional 10 per cent equity when borrowing up to 95 per cent.
The changes in LVR will apply to new loans, top-ups, and increases, with no process changes required, making it easier for customers to access higher borrowing capacity for both investment and owner-occupied purposes.
However, Westpac said that existing IO restrictions will still apply for loans originally written above 90 per cent LVR.
Finni Mortgages principal and lead mortgage broker Eva Loisance told SPI that by raising LVR limits and reassessing expenses and buffers, the bank is unlocking opportunities for investors to grow beyond previously capped portfolios.
“In a higher‑rate environment, when rates rise, borrowing capacity typically falls, but policy improvements can offset some of that pressure,” Loisance told SPI.
“Investors who were stuck due to servicing constraints may now find they can refinance, release equity, or fund their next purchase without needing a dramatic increase in income.”
Additionally, Loisance said higher LVRs will enhance strategic flexibility, enabling investors to conserve cash, diversify faster, and maintain crucial liquidity amid uncertain rates and tight buffers.
“Interest‑only terms are a key tool for managing cash flow, securing a 15 years terms could also help investors hold properties through multiple rate cycles, avoid being forced into selling during downturns, keep more surplus cash for buffers, renovations, or deposits.”
“Altogether it could potentially accelerate portfolio growth and remove the risk of being trapped too early,” she concluded.
