Specialist property home loans made easy!
Each lender has different policies when it comes to the types of properties they will accept.
The secret to getting approved is to find the right lender for the type of property that you’re buying!
Our popular articles on fixed rate loans
Why are the banks so conservative?
How does lending criteria differ compared to single dwellings?
How do the banks assess hobby farms?
Why the banks lend less in the CBD.
When can I apply for a mortgage?
Can you finance building your own home?
Does property location affect the amount I can borrow?
Can the banks lend you the full purchase price?
Does a fixer-upper work for you?
Can banks finance a studio apartment?
What if my property title is out of the ordinary?
Why do the banks have stricter guidelines?
How can we help you?
We’re home loan approval experts, not just normal mortgage brokers.
What types of property can be financed?
- Inner city units
- Studio apartments
- Vacant land
- Postcode restrictions
- Off the plan units
- Owner builder construction
- Warehouse conversions
- Heritage listed
- Multiple units
- Luxury residential
- Hotel conversions
- Mining towns
- Student accommodation
- Properties with rental guarantees
- Flood zoned properties
- Different title types
- Company title properties
- Stratum title properties
- 2nd mortgages
- Countryside homes
- Dual occupancy or duplexes
- Dual key apartments
- Large rural properties
- …and many more!
What does a bank assess?
When banks consider a property as security for a loan, they are ultimately assessing the likelihood that they will lose money in the event that the property has to be sold to repay the debt.
The following are the main considerations that a bank takes into account.
Loan to Value Ratio (LVR)
The LVR is the amount you’re borrowing as a percentage of the value of the property.
Generally speaking, the higher the risk of the property, the lower the LVR you will be eligible for.
Often, you can borrow 100% for normal houses but may be restricted to borrowing as little as 70% LVR with certain unique properties.
In some cases, the only way to get approved is to either come up with a higher deposit or use a guarantor as a no deposit home loan soluation.
Properties that have limited appeal to the general public may take longer to sell so they’re less desirable as security for a home loan.
Banks always want a property that can be sold quickly in the event that the loan cannot be repaid.
If a property reduces in value significantly then the bank could make a loss if they had to sell the property to repay the loan.
Banks aren’t in it to make a capital gain from selling your property – they determine risk as if they were to sell the property today.
If the valuation points to poor performance for your property over the past few years, the bank will likely restrict your LVR.
Some property types such as company title units don’t have a normal certificate of title so there may be legal issues in the event that the bank has to sell the property to recover their loss.
When trying to get approved for home loan secured by an unusual property, our mortgage brokers always present a strong case to the lender.
We highlight your strengths of the property and you as the borrower.
By speaking in their language and providing additional supporting documents, we can often give them enough of a reason to bend their lending guidelines.
Do you have the address?
If you know the address of the property that you need to finance, our brokers can find out more information on that property and get back to you with the specific bank policy that is applicable.
We can search for the property address online and gather information from old sale listings including the limitations or possible problems from a lender’s point of view.
We can also contact the credit departments of several lenders which keep databases on specific properties of interest.
In particular, most large blocks of units (less than 50 units) are in at least one lender’s database.
We can ask them what their most recent credit decision was for an application submitted with one of the properties in that block as security.
This is a quick method we can use to find out if it’ss feasible for you to buy that particular property.
There are actually two types of valuations
There are two types of valuations that are used when valuing a property.
Which one is used will depend on the property and the discretion of the valuer.
The so-called PropertyPro template was developed by the Australian Property Institue (API) as a way for valuers to complete a valuation quicker based on set parameters.
Otherwise known as a short form or in scope valuation, it’s flexible enough to be used for most residential valuations.
Banks prefer short form because it’s a lot easier to read and they can quickly check off whether the property meets their lending criteria.
Making life easier for the banks means there’s more chance that your home loan will be approved.
Out-of-scope tend to be longer valuations because they take into account more characteristics about the property.
They also tend to be expensive and banks don’t like them because it means more work to ensure that they can accept it as per their lending policy.
Out-of-scope is common with commercial properties because a lot more has to be considered in the valuation such as the revenue potential of operating a business on the premises.
However, some residential properties have features and characteristics that are a little outside the square as well.
What methods are used when valuing?
Highest and best use
Due weight is given to the land’s potential of being used for other purposes other than residential.
This is based on current zoning and local council planning rules only and not any potential changes to these rules.
Like banks, valuers aren’t interested in speculative pricing as developers and investors are.
For example, if planning rules allow for the erection of buildings (think rural properties) or for certain commercial activities to be undertaken, the valuer will take this into account in their final valuation.
It’s particularly important for developers or investors considering “land banking” a vacant commercial lot to understand.
When comparing property sales, the valuer needs to compare properties that have similar highest and best use.
Once the highest and best use is identified, the valuer then needs to determine the most likely that a vendor and purchaser would recognise at the date of valuation:
- The use must be legal.
- The use must be within the realm of probability (it must be likely and not speculative).
- The use must be the kind to come within the imagination of a particular purchaser.
- The use should be economically feasible.
Market evidence and comparability
When comparing properties, valuers rely on actual sales, not properties that are currently on the market:
- They consider properties with similar characteristics, quality and located in the same area.
- The sales that took place would need to appeal to the same segment of the market for the property being valued.
- Land use and potential utility should be similar.
- Location should appeal to the same market.
- Similar title and tenure.
- Land topography, shape, slope and view can provide scope, or present difficulties, for development.
- Similar amenities and services e.g. comparing a rural property which has town water to another that has access to town water.
- The date of the transaction and the date of valuation should be close, with some adjustment applied as per the passing of time – a large adjustment for a large period of time would not be good evidence.
No two parcels of land are similar, therefore adjustments need to be made. There is no hard and fast rule.
However, the most reliable comparable sales are the ones that require the fewest and least complex adjustments.
Do you need our help?
Our staff have experience working for various bank and non-bank lenders and as a result know exactly what the banks are looking for when approving a loan. For this reason we often receive enquiries from people requiring finance for unusual properties. Please enquire online and one of our mortgage brokers can help you to find a loan for the property you are interested in buying.