Non-bank lending options
Question from Andrew updated on 26th February 2018:
Most of us are aware that finance companies are not subject to the Reserve Bank's LVR restrictions. I am considering refinancing from a bank to a finance company to "pull out equity". I recently contacted five finance companies and all five advised me that they have chosen to not offer lending where equity is below 40%. I am merely after 30% lending on my investment property, but am increasing the value of my loan by around $20,000. Are you therefore aware of any specific finance companies who lend to investors with less than 40% equity?
Our expert Kris Pedersen responded:
Resimac will look to lend to 80% on an investment property but only if they also hold your personal residence. Liberty may look at 70% on a standalone basis. There is a credit union option which would be useful if your property was out of Auckland or Hamilton. (They wouldn't lend in these two areas). However, their rates have increased considerably of late.
There are then a number of smaller finance companies and a relatively large mortgage trust. All of these have situations where they would lend above 60% LVR. But they look at a lot of factors to determine to what LVR they are comfortable going to. All of the above obviously have other criteria you need to be able to fit as well.
NOTE: Since this question was originally answered, the Reserve Bank's LVR restrictions have eased to 35% (from 40%) for investors.
Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz