Westpac extends interest-only loans to investors with 10% deposit
Westpac is now opening its doors to property investors with smaller deposits. In the latest move to loosen its credit policy, the big bank has increased its loan-to-value ratio (LVR) cap for interest-only investment loans from 80% to 90%.
This means investors who have only saved up to 10% of the property value will be able to take out an interest-only loan with Westpac-owned subsidiaries including St George and Bank of Melbourne, or with any Westpac brand.
But for owner-occupiers, the maximum LVR for interest-only loans will remain the same at 80%.
The change comes in light of falling interest rates and the Australian Prudential Regulation Authority’s (ARPA) decision late last year to remove the 30% cap on interest-only lending. Since June 1, the average rate for interest-only investment loans in Mozo’s database has dropped to 4.41% p.a., down from 5.04% p.a..*
RELATED ARTICLE: More Aussies are choosing to borrow with a 10% deposit says APRA, but are they forgetting one important thing?
Mozo’s Property Expert, Steve Jovcevski said Westpac’s loosening of its credit policy is a step in the right direction and part of the big bank’s efforts to grow its investor customer base.
“Now that Westpac allows a 10% deposit, all those people who thought they had to save up an extra 10% or wait a bit longer, can get into the market earlier and maximise capital growth over the next 12 months, especially with house prices going up in places like Sydney and Melbourne.”
While having only a 10% deposit means you’ll have to pay Lenders Mortgage Insurance (LMI), Jovcevski believes the pros outweigh the cons.
“Interest-only loans with a smaller deposit is an encouraging thing for investors because it allows them to make lower repayments, unlike principal and interest where you have to make higher repayments. This means they’ll have more available funds to purchase potentially another property or spend it on renovation,” he said.
“Property investors who may have been wary about getting into the market with a 10% deposit - not because of the LMI, but because of the bigger principal and interest repayments - may now be enticed back into the market, thanks to the availability of an interest-only option which gives investors just starting out more breathing space.”
And according to Jovcevski’s predictions, more and more banks will increase their LVR caps over the coming months while many lenders will continue to slash their interest-only rates.
In fact, ANZ has already risen its LVR limit for property investors with interest-only loans to 90%, while customer-owned lenders P&N Bank and Newcastle Permanent made the same increase last month.
So if you’re looking to take advantage of low interest rates and higher LVRs in the market, it could be time to hunt down a great deal for your next investment property. Compare investment loans below or head over to our investment loans comparison table for even more options.
Compare investment loans - last updated January 26, 2021
Smart Booster Investor Bundle Home Loan
1 Year Discounted Variable Rate, Interest Only
variable rate
comparison rate
Initial monthly repayment
1.99% p.a.variable for 12 months and then 2.74% p.a.2.71% p.a.A super low introductory rate home loan with no monthly or ongoing fees. Unlimited free redraws and unlimited additional repayments to help you build your equity and own your home sooner. Multiple loan splits available. (Rates revert after introductory period ends).
CompareCompareSmart Booster Investor Bundle Home Loan
A super low introductory rate home loan with no monthly or ongoing fees. Unlimited free redraws and unlimited additional repayments to help you build your equity and own your home sooner. Multiple loan splits available. (Rates revert after introductory period ends).
- variable rate
- 1.99% p.a.variable for 12 months and then 2.74% p.a.
- comparison rate
- 2.71% p.a.
- Upfront fees
- $520
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- Optional - with 0.10% additional interest
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $50,000
- maximum borrowing amount
- $1,000,000
- type of mortgage
- Variable
- Repayment types
- Interest Only
- Availability
- Investor
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Smart Booster Investor Bundle Home Loan
Celebrate Variable Home Loan
<60% LVR, Investment, Principal & Interest
variable rate
comparison rate
Initial monthly repayment
2.54% p.a.2.54% p.a.Enjoy zero fees and a speedy online application process. Free extra repayments and redraw facility. Flexible loan repayments. Minimum 20% deposit required. Crowned Best New Home Loan for 2020 by the Mozo Experts.^
CompareCompareCelebrate Variable Home Loan
Enjoy zero fees and a speedy online application process. Free extra repayments and redraw facility. Flexible loan repayments. Minimum 20% deposit required. Crowned Best New Home Loan for 2020 by the Mozo Experts.^
- variable rate
- 2.54% p.a.
- comparison rate
- 2.54% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $100,000
- maximum borrowing amount
- $2,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Investor
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Celebrate Variable Home Loan
Fixed UHomeLoan
Investment, Principal & Interest
variable rate
comparison rate
Initial monthly repayment
p.a.2.60% p.a.Lock in a great low home with UBank - 2020 Home Lender of the Year. Fast and easy online application. No monthly account fees. Winner of two 2020 Mozo Experts Choice Awards for best Fixed Rate Home Loan and Investor Fixed Home Loan.^
CompareCompareFixed UHomeLoan
Lock in a great low home with UBank - 2020 Home Lender of the Year. Fast and easy online application. No monthly account fees. Winner of two 2020 Mozo Experts Choice Awards for best Fixed Rate Home Loan and Investor Fixed Home Loan.^
- variable rate
- p.a.
- comparison rate
- 2.60% p.a.
- Upfront fees
- $395
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free up to $20,000 p.a.
- Redraw facility
- no
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $100,000
- maximum borrowing amount
- $2,000,000
- type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Investor
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- $395 Establishment fee waived for fixed rate loans that settle by 31 March 2020.
Read our Mozo Review to learn more about the Fixed UHomeLoan
Well Balanced
Investor, Principal & Interest, LVR <80%
variable rate
comparison rate
Initial monthly repayment
2.36% p.a.2.42% p.a.Zero ongoing fees and free extra repayments and redraw facility with an option for an offset account.
CompareCompareWell Balanced
Zero ongoing fees and free extra repayments and redraw facility with an option for an offset account.
- variable rate
- 2.36% p.a.
- comparison rate
- 2.42% p.a.
- Upfront fees
- $785
- Ongoing fees
- $0.00
- Discharge Fee
- $300.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- Optional - $10 per month
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $200,000
- maximum borrowing amount
- $2,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Investor
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Well Balanced
Smart Home Loan
Investor, Principal & Interest
variable rate
comparison rate
Initial monthly repayment
2.74% p.a.2.76% p.a.A low-rate home loan that could save you thousands. No ongoing fees. Unlimited additional repayments. Unlimited free redraws with no minimum redraw amount, Limited time only.
CompareCompareSmart Home Loan
A low-rate home loan that could save you thousands. No ongoing fees. Unlimited additional repayments. Unlimited free redraws with no minimum redraw amount, Limited time only.
- variable rate
- 2.74% p.a.
- comparison rate
- 2.76% p.a.
- Upfront fees
- $520
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- Optional - with 0.10% additional interest
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $50,000
- maximum borrowing amount
- $1,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Investor
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Smart Home Loan
^See information about the Mozo Experts Choice Home Loans Awards
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