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Time may be running out for investors who use Low-Doc loans.

From 1st December, many investors wanting to refinance an investment property with a low-doc loan will face a major challenge.

Australia’s leading mortgage insurer, Genworth Financial, has announced that from 1st December, it will no longer insure low doc investment loans which are being refinanced.

And, the banks don’t usually like to lend more than 60% of the property value without mortgage insurance.

That means that the banks who use Genworth to insure low doc loans won’t want to lend more than 60% of the value of the property.

Also, Genworth will not insure low doc loans which involve equity release, cash out or debt consolidation.

And, they will also now require low doc borrowers to have an active ABN for at least two years and to provide 12 months BAS statements from the Tax Office.

Commonwealth Bank has already indicated it will follow Genworth’s policy.

Other lenders who use Genworth to insure low doc loans are expected to issue similar policy statements soon.

So, if you are planning a low doc refinance of your investment property you have until one minute to midnight on 30th November to lodge an application, according to a CBA release.

The other big mortgage insurer, PMI, has already refused mortgage insurance for investors taking cash out of a property. Don’t be surprised if PMI now follows Genworth’s harder line.

If you have been delaying refinancing an investment property, don’t delay any longer. You should act now. Next month, the opportunity will have passed you by.

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