Hello, Is it still true that banks have a resistance to loan for the purpose of NRAS investments? Are there any finance organisations willing to loan at comparible rates to standard investment property?
Financing for NRAS properties have changed a lot since they were first introduced. Many lenders will now go to 90% LVR. The biggest variable is the valuations. We do about one NRAS property a month and probably one out of 7 comes back with a lower valuation.
NRAS properties are good but you just need to ensure that you do not over pay on the stock.
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Thank you shahin. Financing is then easier for existing NRAS but as many are sold off the plan currently do you have any tips to avoid problems at settlement. The answer I guess is don’t pay above market but as noone knows what a market will be in 6 months. Does your advice to client offer any safety guidelines. Maybe don’t pay more than comparable product at time of contract? Insert valuation clause in off plan contract?
This is always a risk with properties purchased Off The Plan, whether they are NRAS or not. The best advice I can offer is to have your broker order an upfront valuation on an "as if completed" basis, so that you can see how the valuer would value the property today if it were available to be settled immediately. if the valuation is on the money or close to on the money, it is probably reasonable to proceed, as prices are unlikely to fall further in coming months. i.e – I think all the falls , or softening of various markets, has probably run its course, and bottomed out.
But it's always preferable to purchase something completed or near completed ( within 2-3 months) or under a construction arrangement, as you can secure a genuine valuation and unconditional loan approval now, that will hold water.
Hello, Is it still true that banks have a resistance to loan for the purpose of NRAS investments? Are there any finance organisations willing to loan at comparible rates to standard investment property?
To answer that in brief – you should not be paying a rate loading for NRAS but to qualify this the type of property you buy and the consortium will dictate which lenders are in the mix.
Yes we are finding with the right property the valuation and purchase price are coming in at the same figure.
Many properties are over priced as they have the marketing fees in built to the price.
Lenders do go to 90% plus LMI and there is no reason why you should pay a higher rate or application fees / costs.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
You could also do 90% plus lmi plus 20k if the extra is needed/suitable for your purposes – forward planning will also dictate if lenders that allow the nras incentive to be used for servicing are required now or later.
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