Market Insights by Kevin Young

APRA Attack – Targetting You

Property Club Insights By Kevin Young

By surprise has blundered into a very stable property market causing 1.7 million people into financial stress. To this number can be added the hundreds of thousands of trades and those associated who are now without jobs from stalled construction across the nation.

The problems.

1. You have two or three properties and want to add to your portfolio to avoid dependence on a pension. APRA have instructed that your serviceability must include not interest only on your current investments but a 50% jump to principal and interest. No business makes a business investment on principal and interest. The result is that your expansion of your financial independence comes to a crashing halt. We can fix that.

2. You may have a number of properties that you are happily servicing at the moment but now your bank wants to increase your payments 50% by surprise. They have sent you a letter saying that they want you to go principal and interest. You can’t find this extra money and you may have been running down your savings to date, to satisfy this bank greed. You are in financial stress. We can help!

As above, you simply can’t find the extra 50% that the banks want. You are forced to sell some, if not all, of your investments. You have no alternative but to face a future on the pension as a result. Your financial future is wrecked but we can help.

You may have many properties and be a part of the 10% of people who can retire without a pension. You are easily able to handle the interest only mortgage repayments from the rent as well as paying the ongoing repairs, maintenance, body corporate fees etc as well as land tax. The residue is enabling you to live without the pension.

Suddenly this ideal retirement is turned upside down as the various banks are demanding a 50% jump in some of your mortgages and others up to a 300% jump. Yes they have decided they won’t give you a twenty year P&I period, but because you are retired they want it cleared off in ten years.

You cannot find this extra cash to satisfy the bank greed. Your only alternative is to sell off your properties and apply for a pension. We can help!

There is another case study of people hurt. Expert investors know to buy to the best quality and location that they can afford. With new APRA serviceability rules, this is no longer possible. Some investors who once qualified are now completely denied funds. Others, have to downgrade their purchase to one with less capital, appreciation, and more. Unless sought-after by tenants.

Bad for investors, bad for the country, bad for tenants.

The solution.

Step 1
OK all 1.6 million of you, or with your partners the 3.2 million of you, here is the simple solution. Write to your bank and request that they review and repeal the principal and interest request as you can’t afford it and it’s forcing you into financial stress.

Step 2
Will be either the bank agreeing to this common sense or the bank saying “no!” If it’s the former then you are happy with this solution. If it is the latter then you are not. But here is the next step.

Step 3
You can contact the Club and the Federal Banking Ombudsman with this draft letter that we have prepared for you.

Hopefully, we can show the banks whos boss.

Kevin Young