Many of you property investors most likely read recently, that the Australian Prudential Regulation Authority (APRA Press Release) is tightening bank loans to property investors.

News Corp Australia reported the story here: Stricter loans to cool property market

What these changes mean in general, is that those of you who haven’t yet stepped into the property market, would find it a bit more challenging to borrow from banks in the ranges of 90-95%  (especially the big 4 banks) and you would have to allocate at least 20% of the purchase price plus reserves for stamp duty and other loan costs.

However with off-the-plan purchases you could save time and arrive to settlement with more savings and without over-extending yourself.

Existing investors won’t be impacted so much, especially if they already have equity, however, everyone should take these changes into account, and not over-commit when investing in properties.

Good brokers can help new investors a great deal, and also assist those who have just recently got exposed to the market in finding better deals with other small lenders or even with non-bank institutions who started taking the charge now.

Personally I don’t see these changes as a big issue at all, the only significance is that in the first 1-2 investments when investors normally prefer to get into the market and keep more cash flow for themselves, they will have to buy smart and prepare a good strategy, and there are various alternatives for doing that.

The only red flag as I concern, is to keep investing based on individual’s own affordability and with a good responsible advice.