Dual occupancy

Dual-occupancy homes are becomingly increasingly popular as an alternative to single dwellings. Many people are approaching the major banks to seek finance for these property types.

But how does the lending criteria differ for these homes, compared with single dwellings? Read on to find out more.

Most lenders limit mortgages for dual occupancy properties to 80% of the property value or purchase price. However some of our lenders have very lenient lending guidelines for these properties.

How much can you borrow?

First home buyer: 95% of the property value.

Investor: 95% of the property value.

Low doc: 80% of the property value.

Construction: 95% of the total cost of the land and contract price to build the duplex.

Discounts: Competitive professional package and basic loan discounts are available.

Note: The majority of lenders restrict the loan amount for duplexes to below 80% of the property value, or 60% for low doc loans. We deal with banks that are willing to consider lending more, depending on the location and value of the duplex.

Why are the banks so conservative?

Duplexes and dual occupancy loans are considered to be a higher risk by most lenders because fewer people want to buy two houses on the one block of land. This means that if you can’t repay your loan the bank will take longer to sell the property, or may end up selling for a lower price.

Because of this they tend to limit the percentage of the value of the property that you can borrow (known as the LVR) to protect themselves.

Why do some banks have different policies?

Each lender has their own opinion about the risk associated with a duplex or dual occupancy. Generally their policies are created using data from their previous loans.

If one lender has had trouble selling several duplex properties or has had a significant loss on several mortgages, then they may adjust their maximum LVR for all properties with more than one dwelling on a single title.

How do lenders view dual-occupancy properties?

Many lenders are very risk adverse when it comes to the types of properties that they take as security. They may take a strict approach to dual-occupancy homes and may prefer to decline good loans rather than take the chance that they may lose money on some of their mortgages. These types of lenders are highly unlikely to allow you to borrow more than 80% of the property value.

Are duplex properties harder to value?

Yes, bank valuers use comparable sales in the local area to determine the value of your property. If you are buying the property then they will usually value the property at the contract price.

However if you already own the property then they may be a little conservative because they will have trouble finding other dual occupancy properties that have sold in the area, and do not have the contract of sale as additional evidence to support their valuation.

In capital cities they may use a wider search area to compensate, and as a result the valuer can normally find enough comparable sales of duplexes, dual occupancies, properties with granny flats and houses converted into two units. However in smaller country towns there is almost certainly going to be a lack of comparable sales, and as a result the bank valuer may be more conservative.

If you are looking to purchase a dual-occupancy dwelling and wish to apply for finance, please call us on 1300 889 743 or enquire online today.

What are dual-occupancy homes?

A dual occupancy is where there are two houses or dwellings on a single block of land. Common examples of dual occupancies include granny flats, small dual townhouse developments or rural blocks with two separate houses on them.

Duplexes

Duplexes are a type of dual occupancy, often with either two units on one block of land or with two houses that share a common wall.
Duplexes can also be houses that have had extra walls & entrances put in to convert them into two separate units.

Granny flats

A granny flats, sometimes called ‘secondary suites’ or ‘accessory apartments’ are a a seperate smaller dwelling, sitting on the same block as the larger primary property. Some granny flats are just separate living spaces, upstairs or downstairs of the main living quarters.

They are usually designed to house older relatives, provide separate guest accommodation, offer more privacy to a family or can be used as an additional general room for hobbies or work.

Apply for a mortgage

Our mortgage brokers specialise in helping people to finance properties that many lenders do not accept. We can help you to find a lender that will accept your property as security, and then to get an approval for the loan amount that you need.

Please call us on 1300 889 743 or enquire online and one of our mortgage brokers will let you know your finance options.