Indigo Finance a finalist in the MFAA 2016 Excellence Awards

The Mortgage and Finance Association of Australia (MFAA) is getting ready to announce the winners of its 2016 Excellence Awards. Indigo Finance is a finalist in the Customer Service category.

“We’re proud of the feedback we get from clients about our customer service,” says Melanie Cunliffe, founder and owner of Indigo Finance. “When you’re committed to giving an exceptional customer experience, nothing can top brilliant customer feedback, but to be recognised by the industry in this way is an enormous honour.”

The MFAA presents its Excellence Awards to members of the association who display exceptional practice in mortgage and finance. The awards are designed to encourage members of the industry to constantly improve and strive for excellence. They recognise individuals and organisations that help the industry evolve through best practice and innovation.

“We work hard to give flawless advice, but I’ve always been passionate about customer experience,” says Melanie. “It’s not enough for me to give a client the right advice; I want them to have a seamless, stress-free experience through the whole process.”

Indigo Finance has made a strategic decision to invest in customer experience at the heart of the business.

“I want the quality of our services to speak to our clients and for them to tell their friends and colleagues about their experience,” says Melanie. “Last year we grew 70 percent, so I’d say it’s working.”

With Lending Changes Come Great Opportunities

Changes to lending rules can mean good news and bad news for property buyers.

Investors face the bad news. Investors can borrow up to 15 percent less under the new rules. Our tips below will soften the impact.

The red carpet is out for homebuyers. Lenders can’t lend as much to investors, but that doesn’t mean they don’t want to lend. We talk about the upside of the new rules for homebuyers below.

Background to the rules

Regulation forces cutbacks in lending for property investment

The Australian Prudential Regulation Authority (APRA) was concerned about the rate at which the big four banks were issuing investment loans. Over the last 12 months, it changed the rules to make it harder to finance a loan for property investment. As you may well know, the banks:

  • Have to hold more capital in reserve against their residential property loans
  • Are required to increase their investment lending by less than 10% per year

The banks’ reaction

Interest rates went up across the board as a result of the changes although we have seen some reprieve with the recent RBA cut. Lenders also had to change their individual policies to restrict the growth in lending for property investment to less than 10 percent. We saw changes like lenders:

  • Requiring higher deposits
  • Having specific requirements around certain types of properties
  • Introducing more conservative ways of looking at income
  • Scrutinising living expenses when assessing affordability
  • Tightening the reins on interest-only loans

And the changes continue to roll in.

All is not lost for investors

Investors have seen their purchasing power reduced between 10 and 15 percent. But that doesn’t mean lenders aren’t open for business. It means it’s more important than ever to get good advice on your loan structuring.

Top tips for investors

It’s easy to get caught up in the hype about tighter lending rules, but rates are still at the lowest level in history. This could be an excellent time for you to get into property investment. And finance is still available if you and your broker are smart in how you go about getting it.

Yes, you would expect us to say it’s best to go with a broker. But the new rules mean good advice is more important than ever. Now, it might not just be the difference between getting the best deal for your circumstances; it could be the difference between getting finance and not getting it.

  • Find an expert: You need a broker or lending adviser that is a specialist in navigating investment lending. They’ll be able to structure your loans right and will know the policies of multiple lenders so they can get you the best rate.
  • Consider diverifying: When it comes to ldners, you don’t have to have all your eggs in one basket. You can take advantage of different policies and appetities for lending.
  • Know what you’re buying: Make sure your broker or lender knows the type of properties you’re looking at. You don’t want to be surprised at the last minute – especailly at auction – to find the lender you have in mind may have restrictions on that postcode, density, age or size of property.
  • Be lender-ready: The tightening in lending means the little things count more. For instance, keep an eye on your credit card limits. If you’re not spending up to the limit, reduce it. That can instantly boost your borrowing.

The red carpet is out for homebuyers

Lenders don’t want to stop lending; they just can’t lend as much to investors. That means they’re rolling out the red carpet for homebuyers. Heavy competition means cash-back offers and fee waivers. Combine that with the cooling in the Sydney market and things are looking up for homebuyers. That’s especially true if the boom has built equity in their existing home that they can use towards an upgrade.

First-home buyers

Things have been tough for people buying their first home. One of the biggest challenges is saving for a deposit. It’s not just about having the lump sum. You have to show the bank you acquired it through a pattern of saving money, i.e. you have the discipline to pay off a mortgage. A couple of tips:

  • If you have family to offer additional security, you can offer a lower deposit, which means you don’t have to show as long a history of saving.
  • If you’ve been renting, you can use your rental history to show you have the discipline to make regular repayments.

The bottom line

We shouldn’t forget the changes are designed to stop the bottom falling out of the Australian property market, which is something none of us would benefit from. That’s not to say they can’t be frustrating. As a broker, they come at us in waves from all sides.

On the positive side, monitoring the changing environment all the time means we understand what the implications for our clients and we can provide the right advice. That becomes ever more important the tighter things become — and they will only get tighter in the coming months.

If you’re in the market to buy a property this autumn or winter, give us a call. We can provide advice and handy fact sheets on different ways to borrow for you to get into the market even in challenging circumstances.