Investment mortgages
The best Investment mortgages have become much tougher to get following the
credit crunch, but deals still exist. If you are looking to invest in property
read our Investment mortgages guide
Investment: A potted history
Investment loans has become big business in Australia. The decade-long
property boom, from 1997 to 2007, with its easy finance and rapidly rising house
prices saw buying a property to rent out soar in popularity, turning from a
niche activity to one an estimated one million Australians are invested in.
As Investment properties boomed, financing deals became increasingly easy.
Traditionally loans had required at least a 25% deposit and rent to mortgage
interest cover of at least 125%.
However, with house prices on the up, demand rising and competition intensive in
the Investment mortgage market, lenders relaxed criteria, asking for smaller
deposits, rent to interest cover as low as 100% and even basing mortgage offers
on borrowers own personal income.
Interest rates on Investment mortgages even became broadly comparable with those
on residential loans.
The arrival of the credit crunch in summer 2007, pulled the plug on the party
and Investment mortgages are now much harder to obtain. Research by financial
comparison service Moneysupermarket has shown a 95% decline in the availability
of Investment mortgages between September 2007 and May 2009.
Rates are now considerably higher than residential mortgages, larger deposits
are required and lenders are much more choosy about who they lend to.
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