Is it Really Possible to Purchase an Investment Property with 100% LVR?

This instalment of FYI discusses the possibility of securing an investment property using 100% debt. This is a rare and genuine opportunity for businesses and investors to grow, secure investments, purchase equipment or take advantage of opportunities they may not have otherwise been able to. Read on:

This instalment of FYI discusses the possibility of securing an investment property using 100% debt. This is a rare and genuine opportunity for businesses and investors to grow, secure investments, purchase equipment or take advantage of opportunities they may not have otherwise been able to.

It sounds like clickbait but, even though it would be great clickbait - it is actually true.

At CapStack, we are very careful with what information we put out and generally shy away from things that seem too good to be true. Needless to say we did a double-take when we heard about the possibility of buying an investment property without at least some equity.

But, upon some fairly rigorous fact-checking and investigation we discovered to our shock (and delight) that it is actually possible to borrow 100% of the purchase price of an investment property up to $5 Million. (the scheme can also be used in other ways which I touch on a bit later).

So how is this possible?

Under the latest version of the GGS aka SME Recovery Loan Scheme the government has agreed to guarantee 50% of loans to businesses impacted by Covid. This has basically given banks and other participating lenders a free hit so they have decided to be unusually generous in a bid to secure a raft of new business clients. Now, the t's and c's vary from lender to lender but they are behaving quite competitively about it which works out well for businesses. It is a rare and genuine chance for a businesses and investors to make a move they may not otherwise have had the cash to make.

Before you go rushing to the nearest auction to snap up your dream investment property there are a few provisos to this...so let's take a sec to catch our breath.

• Firstly, there is a limited time to take advantage of this amazing (and probably never to be repeated) opportunity...and time is definitely running out. You must have your loan approved and all the documents signed and submitted by June 30th. Some lenders are even requiring loans to be approved 'in principal' even earlier. In bank land, given their relatively slow processing times (made even slower by covid), that means you need to get your act together and begin the approval process in the next few months at the latest.

• The maximum loan term under the scheme is 10 years. At the end of that time frame, a portion of the loan will mature (up to 30 or 40 percent) and you could have a whopping bill to pay and you may not be able to refinance the entire amount. This needs to be planned for.

• This scheme cannot be used to buy residential property or shares.

• Not all lenders will allow the entire term to be 'interest only', in fact many limit the 'interest only' period to between 2 and 5 years.

• Borrowers need to be able to demonstrate that they have been impacted by Covid-19.

The scheme can be used for a wide range of additional business purposes including to refinance existing debt (subject to a few conditions), purchase equipment, buy another business and others. This is a very real scheme and the possibilities and opportunities it can generate are also very real. Plus, the banks are very eager to write deals under this scheme so all the stars seem to be aligned.

If you think this could be of use to you or your business, don't hesitate to contact us to have a confidential discussion.

If you are keen to learn more get in touch with the team at CapStack.

Are you an investor looking to dip your toes into the market? Let us know!

Please let us know if we can help in any way to get your commercial property finance needs taken care of. Are you looking to purchase commercial or industrial property within Australia and require bank, non-bank, or private financing? CapStack can help. Are you a property developer looking for project finance to get your site moving? We can help assist you source finance. Are you a or property investor looking to purchase your next asset? Start here to connect with is and send though some basic information to get the ball rolling or email us directly. We work with lenders Australia-wide ready to fund investments and development projects. This is where CapStack comes in.

CapStack works alongside Australia's most active lenders from across the board. We help developers and investors fill their capital stack by providing access to the capital puzzle piece they are missing. CapStack works directly with developers and investors who need access to capital markets.

How can we help you with your finance needs or those of your clients? Give us a call or start here.