Interest rates may be at record lows, but credit availability has actually got much tighter.

Veteran adviser Kris Pedersen, of Kris Pedersen Mortgages, says more comprehensive credit reporting is required now, so credit checks and bank servicing calculations are far more rigorous.

“Additionally, banks are much less keen on interest-only loans. When they’re up for renewal, investor portfolios are reassessed and, if they don’t meet the required terms, they are rolled over on to principal and interest loans.”

This situation is catching many investors out and it can make their cashflow much worse, he says.

It’s not good news for investors looking for finance, but now help is at hand in the form of a new lending product, Select, which is available via non-bank lender Bluestone.

Pedersen says Select allows for higher LVR lending, can do 80% standalone lending, has more relaxed servicing criteria and makes it easier for the self-employed to get funding.

“While it won’t take us back to the old, pre-GFC days of low doc funding, it means there will be more ‘out of the box’ options available for investors.”

Interest-only loans will also be available for those with good records, with rates starting from 4.99% – not too much higher than those offered by the banks, he adds.

“But it’s not a property trader product, it is not for developers or for land banking or construction, it is not currently for commercial property and it’s not very apartment friendly.”