Home loan rules have been relaxed – here’s what you need to know

10 July 2019

Thanks to a change in government regulation announced earlier this month, it’s easier than ever for prospective homebuyers and investors to take out a bigger mortgage.

So, if you’ve been dreaming of a larger allotment or upgrading from a three bed to four bed home, now’s your time to act!

Whether you’re a first homebuyer, upgrading your family home, downsizing or investing, we’ve broken down what these relaxed new home loan rules are, and how they can work for you.

Bank-speak explained: how and why you can take out a bigger mortgage

On Friday 5 July, The Australian Prudential Regulation Authority (APRA) announced that it had loosened the serviceability restrictions on home loan mortgage assessments.

Essentially, this means it will now be easier for you – a prospective homebuyer – to borrow money for a mortgage, and in many cases, will increase the amount you can borrow – potentially up to 14 per cent more.

This is because the APRA has decided to relax stringent lending restrictions on banks and other financial institutions, making them more consistent with low interest rates.

Banks will no longer need to see whether their customers can afford a seven per cent (or more) interest rate on their residential home loan repayments – they will have the freedom to set their own serviceability buffers.

The only restriction is that the banks must ensure borrowers can repay their loans if interest rates were at least 2.5 percentage points higher than their current rate.

With many banks now offering variable mortgage rates in the low-3s, that means many borrowers are likely to be tested at a rate below six per cent per annum.

RateCity.com.au analysis shows a family on a household income of $109,688 would be able to borrow up to around $60,000 more if their loan was assessed at 6.25 per cent instead of 7.25 per cent.

The average single person could potentially be able to borrow up to approximately $50,000 more, under the same circumstances.

Act now! It’s a buyers market

The removal of the seven per cent minimum interest rate repayment assessment, paired with low interest rates means it’s a buyers market, says Springwood’s Sales Manager, Nathan Cag.

“All buyers will benefit from being more easily able to take out a mortgage – potentially even a larger mortgage – and with added incentives like negative gearing for investors and grants for first home buyers, there has never been a better time to buy or invest in property,” said Nathan.

“This is a game changer, and will open the door to the property market for many South Australians.”

For buyers like you, relaxed restrictions on taking out a mortgage (potentially a larger mortgage too) may mean you’re able to invest in a larger allotment, home, or premium specs, all adding future value to a home – particularly in a growing community like Springwood.

“We’re going to see a lot more infrastructure popping up at Springwood, including a village centre, shops, the completion of the Gawler East Link Road and more – meaning land, and homes, will only increase in value,” said Nathan.

“So, if you previously haven’t qualified for a mortgage, or aren’t sure whether you’d qualify, I’d recommend getting in touch.

“Aside from helping you find your dream home or allotment, we work alongside dedicated brokers who can help you arrange finance. With the new relaxed regulations, its likely you may now qualify.”

Call Nathan today on 0402 532 693 or 1800 224 551 to find your dream home and land at Springwood – a better place to live.

With prices starting from just $134,000, there are a range of allotments on offer.

From compact 336m2 sites perfect for downsizers, through to allotments over 800m2, the choice is yours!