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.”

Foreign borrowers: Private lenders only option

PMA offers loans to foreign borrowersIn the last month all four major banks have made changes to foreign lending policies, making it difficult for overseas borrowers to access finance in Australia.

The Commonwealth Bank will no longer give mortgages to self-employed applicants using foreign income to service their loans and will no longer approve loans for temporary residents receiving foreign currency income. The maximum loan-to-value ratio for temporary citizens living and working in Australia and being paid in Australian dollars has been lowered from 80% to 70%.

ANZ tightened its rules around lending to foreigners, after the bank discovered that loans written in their network of offices throughout Asia were sometimes missing crucial documentation.

National Australia Bank lowered its loan-to-valuation ratios for foreign mortgage applications, and Westpac introduced tighter lending rules for foreign property buyers.

While the banks are making it virtually impossible for foreign borrowers to obtain finance for the purchase of property, there are still options available to overseas buyers in Australia.

Private lenders approach the lending process differently to the major banks. Usually the loan is secured by property equity so private lenders aren’t concerned with overseas income sources and serviceability. This means that as long as a foreign borrower has property assets to use as collateral the lending process should go smoothly.

Despite the changes to the lending practices of many of the major banks in Australia, it should come as a relief to foreign borrowers that there are still options available to access finance through private lenders.

 

By Tim Hart

Director, Private Mortgages Australia