In addition to your FOMO on property, media coverage on changed rules and interest rates for investment loans may also be alarming you. The reality is that much of the media noise regarding investment property loans is overblown. What do the changes to interest rates and lending mean to you if you’re considering investing in property?
If you’re looking for an investment to fund your retirement – in property or otherwise – and you want to consider all the relevant variables before making a decision, my advice first and foremost is to talk to an expert, then take a deep breath before acting.
In the meantime, here are a few things to consider along with some background that might provide some perspective that the media hasn’t:
Here are the recent investment loan changes in a nutshell:
- Advertised interest rates for owner occupied homes is now as low as 1.99%. So far nothing to fear.
- Changes to serviceability mean the banks (see below) want to be sure that you’re able to repay a loan in moderate to extreme circumstances. This should only scare you if you’re already stretched financially and want to buy an additional property. For everyone else, if you could afford a loan before the changes, you’ll still be able to secure one now even if there are a few more hoops to jump through.
- If you’re an owner-occupier, it’s likely the banks will be falling over themselves to secure your business in terms of both rate and features. And if your owner-occupied loan was set more than three years ago, you should review it as there are sure to be better deals available now. Once again, not scary.
We say, “Take heart”
If property appeals to you and you’re beginning to feel a FOMO (fear of missing out), the new rules should be no impediment to moving forward. However, it’s important both to consider the facts and also to talk to an expert who will help you apply them to your own situation. This will enable you to set yourself up for sound investment planning that considers all the relevant factors and fits into your whole-of-life financial plan and investment portfolio. I invite you to give me a call to discuss how the changing interest rates and lending requirements can apply to you.