We are glad to have you back on our channel. Today, we will discuss Resimac's specialist investment loan products. There has been a discussion of this product in the past, but we are going to discuss it again. We are mentioning this because we have assisted quite a few clients with using this product to purchase their next investment property. Under the current lending environment, with such strict assessment policies across the board, this is a very beneficial tool for investors who wish to further expand their investment portfolio. Therefore, today we will discuss some of the key points of this product together and see if it is a suitable product for you and if it can help you with your future investment plans.

Who it is for

For investors who want to invest further but are unable to raise the enough funds through traditional residential home loan products offered by banks and non-bank lenders. You must have one or more mortgage-free investment properties that can be mortgaged to Resimac to obtain finance. Note that the mortgage-free property must be an investment property, it cannot be your own home or commercial property.

If you do not currently have a mortgage-free investment property, you can contact us for an analysis of your existing loan structure. Many investors who have purchased early and whose properties have increased in value several times, may already have a home that can be discharged from the bank. However, you might not know about it if the bank doesn't take the initiative to remind you. You can entrust us with the task of calculating and analysing whether there is a property that can be discharged from the bank, and we will help you to achieve your future investment objectives.

However, if you need just a little more money to purchase your next investment property, Resimac will also accept your next investment property as security. Even though the loan amount will be relatively small.

The key features of this product

Income requirements

The best feature of the Resimac product is that the borrowing capacity may be assessed solely based on the rental income generated from securities that have been given to the lender. Furthermore, you must prove that your existing loan can be paid off without any problems with your current income and expenses.

Loan term

Although the loan term is shorter than the mainstream banks' 30 years, the product is not a short-term product, but one that you can hold onto for a long time.

Approvals

The loan amount is also quite flexible. The range is from $200,000 to 3 million, so it can be used for a variety of investment properties.

Use of the loan

As long as Resimac can accept your investment project, it can be used for a wide range of purposes. It's not only designed for clients to purchase their next investment property. If you have a legitimate or reasonable purpose for investing or borrowing, this product is suitable for your needs.

LVR

The LVR can also differ depending on what kind of security you give to the lender. If it's a new build investment property, it can go up to 70%, but if it's an existing property, it can go down to 60%.

Repayment type

The main difference between this product and other loan products is that you are required to pay interest only for the first 50% of your LVR against your security. Anything above that, you must pay principal and interest. When your loan amount is less than 50% of the LVR, you will not be able to pay P&I. You will only be able to pay interest only.

Fees and interest rates

As it is a non-bank lender, the fees are higher than bank products.

Firstly, the establishment fee is 1.5% of the total loan amount, which is a one-off payment. There is no cashback, so you can refinance to another bank anytime without penalties. Moreover, every time a property is mortgaged to Resimac, they require a valuation report. Generally, this costs between NZ$1,000 and NZ$1,500 per property, or more if the property is expensive.

In addition, the interest rates are slightly higher than the banks' current floating rates at around 6.09%. A fixed interest rate is also available, but the rate will be much higher than a floating rate.

Example

The following example will help you to quickly understand how much you could borrow if you were to use Resimac to buy your next property. Let's assume you are buying a property with the outgoings shown in the box on the left. You can see the loan amount is linearly related to the weekly rental income of the property. For example, if your property rents for $500 per week, your loan amount might be around $250,000. Your loan amount increases to approximately $550,000 if your house rents for $900 per week.

These are the details of the Resimac loan product, which hopefully will help more experienced investors or those who are interested in investing in property to achieve their next goal. You are more than welcome to contact us at any time if you believe you are in a good position to use this product or if you are uncertain of your eligibility. We can help you determine if you can use this product to invest more efficiently and if you meet its requirements. Feel free to contact us on 09 930 8999.

Disclaimer: The content in this article are provided for general situation purpose only. To the extent that any such information, opinions, views and recommendations constitute advice, they do not take into account any person’s particular financial situation or goals and, accordingly, do not constitute personalised financial advice. We therefore recommend that you seek advice from your adviser before taking any action.