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Last Updated: 18th October, 2023

If the property you want to buy is located in a flood zone, you may have difficulty getting a home loan.

However, depending on where your property is and how strong you are financially, we may be able to help you qualify.

Banks care about how often flooding occurs

Flood zoning has many possible time frames.

For example, ‘1 in every 100 year zoning’ means that, on average, the property is expected to flood once every 100 years.

This would be expressed as 1:100 year flood zoning or 1% Annual Expedient Probability (AEP).

If your property is zoned to flood more often than 1:100 years then you are unlikely to be able to get a flood zone home loan.


How much can I borrow?

  • 1% AEP (1:100 year flood zone): 95% of the property value.
  • 2% AEP (1:50 year flood zone): 80% of the property value on a case by case basis.
  • 5% AEP (1:20 year flood zone): In most cases we cannot assist with these properties.
  • 100% loans: Available with some of our lenders if you have a guarantor.

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

Note: Lenders are hesitant to lend to riskier flood affected properties. We may need to obtain additional records from council or a valuation report to be able to find a lender to approve your loan.


What requirements do our lenders have?

  • You must be allowed to build on the property or there must already be a house on the property.
  • You must be able to insure the property.
  • The maximum flood height must be lower than the floor height of the house.
  • The bank valuer must agree that the property represents an acceptable risk to the bank.

In some cases you may be able to obtain finance for properties that flood up to 1:50 years (2% AEP) if you have a strong application and can meet the above requirements.


What do the lenders think?

There are many issues with a flood zoned property. The fact the property is susceptible to damage through flooding means that there is a real risk involved for the lender. Most banks will not approve a home loan secured by that property.

Your local council will probably not approve new developments on that land so you may be unable to obtain flood insurance.

Can I still borrow?

As a general rule, 1:100 year zoned land is acceptable because this type of land can still be developed and buildings on the land can be insured.

Banks are willing to accept them as security for a mortgage whereas up to 2% AEP land may or may not be accepted.

However, where you have a good credit history and your finances are strong, you will be in a better position to borrow and the banks may consider lending to you.If you have been able to obtain flood insurance, this will also help your application.

If you are looking to apply for a loan, please call us on 1300 889 743 or enquire online today and we can help you get approval.


What is a flood zone?

If your home is in an area that can be affected by floods then your property may have a flood zoning. Flooding in the area may be minor, moderate or major, depending on the climate and the region that you live in.

In many cities and rural areas across Australia, flooding is common. They are especially prone to occur in dry areas and are generally the result of heavy rain.

Flash flooding is a type of flooding that occurs during heavy storms and produces a large amount of storm water which burdens the drainage system and results in a flood.

Flood insurance requirements

Although flooding is a natural event beyond your control, there are still ways to minimise damage to your property.

It is very important to ensure that you have an insurance policy that covers the risk of flooding. This is a factor that banks take into account when considering whether to approve your mortgage.

Insurance providers such as the NRMA offer flood cover for a variety of events including:

  • High rainfall which causes nearby rivers to overflow, creating a flood which damages your home.
  • High river and dam levels which cause flooding to your home.
  • May cover flooding that occurs as a result of rising sea levels caused by severe storms.

Cover differs from storm damage and water damage so it is best to speak to your insurance provider to make sure that you are covered in the event of flooding.


Protecting your home

Properties built on stilts offer greater protection from flooding.

It is also important to remain aware of a potential flood threat by monitoring websites such as the Bureau of Meteorology. This website provides up to date information on the risk of flooding in your area.

Keeping informed about flood warnings and heavy rainfall will ensure that you are better prepared if a flood occurs.


Speak to us today!

We are the experts in getting loans approved:

  • We know which banks will accept your home as security for a loan
  • Our mortgage brokers are credit experts who know the lending policies of over 30 financial institutions
  • We offer nationwide services
  • Free financial services for most loan types

If you are looking to purchase a home in a flood zone and need finance, please call us on
1300 889 743 or enquire online today.

We can help you apply with the right lender that will approve your mortgage, regardless of the potential risks involved. Give us a call today!