Via Propertychat:
As you are probably aware the lending landscape is changing rapidly, what was possible a month ago is now a struggle. One of the biggest issues we are facing right now is a new responsible lending requirement for property investors to fully disclose the ALL COSTS of maintaining their properties. This includes insurance, rates, water/sewerage, body corporate fees, maintenance etc. These costs are then to be taken into account IN ADDITION to HEM (the minimum living allowance) and all other costs when calculating the borrowing capacity for a client.
In the past lenders have sensitised the rental to 80% to account for these costs however new ASIC guidelines require lender to sensitise rent to 80% to allow for “vacancies only” and require lenders to include all other costs in the calculation.
This additional requirement is going to see about $5000/mth in expenses added to you borrowing capacity which is going to blow your servicing out of the water.
This new requirement is creeping into all major lenders as we speak with the second and third tier lenders to follow shortly after.
Royal Commission as the Minsky moment for Aussie property.
