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Posted: Fri Mar 26, 2010 7:03 pm
What is the maximum potential LVR for studio apartment in the inner city of Sydney, and what is the smallest living area that would be considered?
Posted: Sat Mar 27, 2010 9:18 pm
For units under 40m2
in the CBD
the maximum LVR is 80%. Between 40m2 and 50m2 we can get 90% on a case by case basis depending on the location, size of the block and overall strength of the borrower (income / assets etc). Over 50m2 inner city units can be funded up to 90% without too many problems using a few select lenders.
What suburb / postcode are you looking to buy in? Can you consider a guarantor loan
(security guarantee) as this will allow you to borrow 100%?
Posted: Tue Mar 30, 2010 12:02 pm
Thanks for your reply Otto.
The suburbs I'm looking in are Darlinghurst, Potts Point, Elizabeth Bay, Rushcutters Bay, Woolloomooloo etc. From your information on inner city studio apartments, those suburbs appear to fall within the postcodes listed...?
I have considered a guarantor loan, and do have a guarantor should it be the only method available. However I do have 20% deposit in the price range I’m looking (200-300k), but most properties I have inspected that are in need of refurbishment, meaning the LVR would likely increase above 80% of to cover capital improvements.
How long before a guarantor loan can be lifted? Is there a minimum term?
Posted: Tue Mar 30, 2010 12:30 pm
Yes the areas you are looking at are considered "high density" / "inner city" by some lenders and not by others. If you are borrowing 80% then you should be fine.
If you need to do work to the unit such as renovations then there are two methods you can use to fund this:
1. Use a guarantor loan and borrow over 80% of the property value. When the renovations are complete you can then ask the bank to revalue the unit and if the loan is for less than 80% of the renovated unit value then the guarantee can usually be removed right away. No LMI would be payable. There is no minimum term for the guarantee, you just have to owe less than 80% of the property value.
2. You can get a tender from a licensed builder
to complete the work to your unit. Ideally you should do this right away after a price is agreed for the unit AND ask for an extra two weeks for settlement so that you can get it all organised in the one go. The bank can then lend 80% of the unit value plus cost of construction.