Mining Town Mortgage
Why invest in a mining town?
Property investors who buy in the right mining town can make big short-term capital gains and receive outstanding rental returns. The only question is, which town to invest in?
The commodities boom has caused many housing booms all through regional Queensland, as well as coastal areas of Western Australia such as Bunbury, Geraldton and Karratha.
How much can you borrow?
How much you can borrow will depend on your situation.
First home buyer: 95% of the property value.
Investor: 95% of the property value (restrictions apply).
Low documentation: 60% to 80% of the property value.
For some people, there are competitive professional packages and basic loan discounts available, which can impact the amount you can borrow.
If you want to purchase a property in a mining town then call us on 1300 889 743 or enquire online and one of our mortgage brokers will be in contact to let you know which banks can approve your home loan.
How will the banks assess my loan?
Some lenders have location restrictions which are particularly conservative for mining towns that have populations of fewer than 10,000 people. Many lenders will restrict your loan to 80% of the property value, however by choosing the right lender you can borrow more.
Many lenders have official or unofficial policies which restrict the usage of rental income from “single industry towns” when they calculate your ability to repay the debt.
Some banks will cap the rental return at 4% or 10% or will only use 60% of the rent income instead of the standard 80% of rent income that is normally used if the property is in a large town or capital city. As a result, you may find your bank saying that you can’t afford to buy more properties!
The good news is that some lenders will look at using a higher percentage of the rental income you receive on a case by case basis, allowing you to borrow more and grow your portfolio.
If you have multiple properties in the one town then some banks will be unwilling to take on your application. This is risky for you as an investor – and for the bank.
Please try to spread your investments between different towns that focus on different resources.
We work with banks with no location restrictions, and an open minded view of investment loans used to buy in a mining town. Please call us on 1300 889 743 or enquire online to find out how we can help you.
Why are the banks so conservative?
Banks tend to be very conservative when assessing a loan with a property in a mining town as security. They think in very long time frames, and worry about the possible risk of the boom ending and the town being deserted.
In particular, during the construction phase of a mine there are often very high rent returns in the nearby towns, which may or may not continue in the long term. The lender can’t do the same amount of research that you have done and so they will take a conservative approach.
Remember that although the price may be skyrocketing now, banks do not share your profit from these capital gains, but they do share your risk if the property decreases in value!
Please be careful to properly research the area that you are buying in to ensure that the mining is ongoing or that the town is economically viable without the mine. If need be, seek independent financial advice before proceeding with your investment.
Which mining towns can be financed?
As a general rule we can finance houses in any town in Australia as long as there is demand for housing.
Some common mining areas we finance are:
- Hunter Valley NSW
- Bowen Basin QLD
- La Trobe Valley VIC
- Goldfields WA
- Pilbara WA
- The West Coast of TAS
Some specific mining towns we receive applications to finance are:
- Singleton NSW (Coal)
- Muswellbrook NSW (Coal)
- Hay Point QLD (Coal)
- Gladstone QLD (Coal, Alumina, Aluminium, Cement products & Liquid ammonia)
- Mount Isa QLD (Copper, Silver, Lead & Zinc)
- Moranbah QLD (Coal)
- Dysart QLD (Coal)
- Middlemount QLD (Coal)
- Blackwater QLD (Coal)
- Emerald QLD (Coal)
- Capella QLD (Coal)
- Clermont QLD (Coal)
- Biloela QLD (Coal)
- Moura QLD (Coal)
- Baralaba QLD (Coal)
- Karratha WA (Iron ore, Sea salt mining, Ammonia exports, Petroleum & Natural Gas)
- Geraldton WA (Iron ore, Nickel, Gold, Oil, Gas, Mineral sands, Copper, Zinc, Lead concentrate, Talc & Garnet)
- Port Hedland WA (Iron ore, Offshore natural gas & Manganese)
- Dundas TAS (Silver, Lead & Minerals)
- Zeehan TAS (Silver, Lead & Minerals)
Please remember that we can finance almost all areas in Australia. Please contact us if you are not sure about your location.
Applying for a mining town mortgage
Some banks will have restrictions depending on the location of the property that you are buying. Many of our lenders have no location restrictions and an open minded view of investment loans used to buy in a mining town.
If you are interested in investing in a property in a mining town then call us on 1300 889 743 or enquire online and our mortgage brokers will find the best home loan for you.