Private Mortgages Australia raises maximum LVR to 80%

Specialist commercial lender, Private Mortgages Australia, today announced that it has raised its maximum LVR to 80%. The decision comes after the private lender partnered with Property Predictions Pty Ltd, the creator of patented methodologies which measure demand trends and predict expected changes in prices across the Australian property market.

“Having access to these Traffic Light Reports from Property Predictions gives us confidence to offer a higher LVR to borrowers who are looking to secure finance against properties in those suburbs,” said Tony Barbone, Managing Director of Private Mortgages Australia.

“Most private lenders will generally only lend 65% to 70% LVR, and a lot of the time this is based on a forced-sale valuation rather than the true value of the security property. We always take the true value of the security property without any tricks in order to give our borrowers a better solution.”

The Traffic Light Reports from Property Predictions employ predictive and patented algorithms developed by leading property market analyst, John Lindeman to provide highly accurate short term rent and price change predictions for houses and units in any suburb in Australia.

“It’s great that PMA is able to use the insights from our Traffic Light Reports to offer better solutions to their borrowers,” Lindeman said. “The predictive software we use gives them the confidence to back the borrower and increase the maximum LVR to 80% in selected suburbs. It creates a win-win situation for both PMA and the borrower.”

Banks now more lenient for SME loans, but still not as flexible as private lenders

Private lenders are more flexible for SME loansA recent article from Australian Broker stated that Australia’s major banks have introduced more lenient lending criteria to make it easier for small and medium-sized enterprise (SME) owners to purchase property.

Westpac announced it would increase its loan to value ratio (LVR) from 80% to 90% following similar changes from Commonwealth Bank earlier in the year. Westpac, CBA and St. George also all announced they would only require one year of financial records as income verification for self-employed borrowers. Previously they had required two years of financial records and tax returns.

SME loans need flexibility

While it’s great that SMEs now have more opportunities to access bank funding, they are still required to show serviceability which isn’t always possible. Similarly, for businesses that need quick turnarounds and short-term funding, a bank still isn’t going to be the right source for funds.

The difference between a bank and a private lender is that a bank focusses on serviceability while a private lender focusses solely on asset value and exit strategy. At Private Mortgages Australia all our loans come with a component or prepaid interest so we don’t need to worry about serviceability. This distinction is the main reason PMA is able to service so many SME loans for short-term finance.

If you have an SME client who can’t get funding from the banks, give PMA a call.

By Tony Barbone

Managing Director, Private Mortgages Australia