This move from the major bank (Westpac) is to allow owner-occupied loans to be secured against an investment property. It is for the situations that may happen wherein the loan is to be secured by a non-owner-occupied residential property. Westpac has already informed their brokers about it and this update will be effective on Tuesday, November 19, 2019.
What Does The Revised Owner Occupied Lending Policy Covers?
The Revised Owner-Occupied Lending Policy will be implemented in the following instances wherein; this update does not intend to generate income as well as not a tax deduction for investment.
It was also noted on the revised policy that the use of non-owner occupied residential property as a security in purchasing an owner-occupied home is acceptable. It is not only limited to the former but also on the use of the equity in non-owner occupied residential property to fund owner-occupier purposes such as the renovation of an owner-occupied property. The exception of this policy is on non-owner occupied residential property to be used as security for bridging loans, as the bank will now allow it.
The announcement for this revision came after less than a month when Westpac has announced that it would be increasing the maximum LVR (Loan-To-Value Ratio) for investor loans with an interest-only term rates at 80% – 90% which also includes any capitalized mortgaged insurance premium this follows the decision from the Reserve Bank of Australia to reduce the official cash rate.
Westpac general manager for homeownership Will Ranken stated that “Providing the support and finance to help buyers purchase their next investment property is a key focus of our lending strategy. “ He then concluded, “We believe this change will provide a competitive proposition for investors looking to purchase their next property.”