How do banks consider bed and breakfast loans?
How do banks consider bed and breakfast loans?
Hello! I work for an organisation as a clerk. I earn $52,000 annually and I want to buy a bed and breakfast property. I don’t know what banks check before approving a home loan for a B&B property. Can anyone explain this to me along with the amount I may be able to borrow?
- Otto Dargan
- Mortgage Specialist
- Posts: 7730
- Joined: Sat Sep 06, 2008 5:55 pm
- Location: Sydney, Australia
- Contact:
Re: How do banks consider bed and breakfast loans?
Hello kenryu.
Welcome to the forums.
Some lenders may not consider a bed and breakfast (B&B) as a residential property. For those lenders who do, you will be required to meet certain conditions to get such a home loan. These may include conditions such as:
You may be able to borrow:
Cheers,
Otto
Welcome to the forums.
Some lenders may not consider a bed and breakfast (B&B) as a residential property. For those lenders who do, you will be required to meet certain conditions to get such a home loan. These may include conditions such as:
- The property is no more than 50 hectares if it is for residential purposes.
- If the purchase is for commercial purposes, the lender may require you to show the business plan as well as income projections for the business you plan to run. This will also allow you to hire professional staff such as cleaners or cooks although traditional B&Bs are operated entirely by the owners.
- For residential purposes, a bed and breakfast property zoned as a Category 1 or a Category 2 is generally preferred by lenders. Regional and Category 3 properties may be financed if you have a larger deposit.
You may be able to borrow:
- Up to 90% LVR, if you are currently employed and the property can be used as a standard residence.
- Up to 80% LVR, if the property can only be used as a B&B and not a standard residence.
- Up to 80% LVR, if the income from the B&B will be relied upon to pay the loan.
Cheers,
Otto
Re: How do banks consider bed and breakfast loans?
I planned on borrowing more than 90% LVR, and it seems I can only do so with a guarantor home loan. Can you please tell me what other benefits this type of home loan offers?
- Otto Dargan
- Mortgage Specialist
- Posts: 7730
- Joined: Sat Sep 06, 2008 5:55 pm
- Location: Sydney, Australia
- Contact:
Re: How do banks consider bed and breakfast loans?
Hi kenryu,
You may find a guarantor loan suitable to borrow the entire 100% of the property value.
Aside from the possibility of borrowing more than 90% LVR, the borrower may enjoy other benefits. Some of them are as follows:
Cheers,
Otto
You may find a guarantor loan suitable to borrow the entire 100% of the property value.
Aside from the possibility of borrowing more than 90% LVR, the borrower may enjoy other benefits. Some of them are as follows:
- As a deposit is not required, you may purchase a property immediately.
- As the payment of an LMI premium may not be required, you may save a considerable amount of money.
- You may receive discounted interest rates from some lenders.
- When you buy the property, you may be able to consolidate some minor debts such as credit card debts.
- The guarantee size may be limited to a certain amount.
Cheers,
Otto
Re: How do banks consider bed and breakfast loans?
Thanks a lot for replying so soon. I’m really excited about all this and I plan on calling you to help me out. Your website has helped me plenty and I’ve shared it with my friends as well.
Cheers
Cheers
-
- Posts: 49
- Joined: Thu Jun 27, 2013 5:04 pm
Re: How do banks consider bed and breakfast loans?
Hi, I want to take a home loan to purchase a hotel unit. I found that a hotel unit mortgage is available and that I can apply for it. How much can I borrow on this type of loan?
- Otto Dargan
- Mortgage Specialist
- Posts: 7730
- Joined: Sat Sep 06, 2008 5:55 pm
- Location: Sydney, Australia
- Contact:
Re: How do banks consider bed and breakfast loans?
Hi Bukowski86,
Most lenders may restrict the amount you can borrow significantly while approving an application for a hotel unit mortgage.
You may still be able to borrow up to:
You can check out our website for more details regarding hotel unit mortgages.
Cheers,
Otto
Most lenders may restrict the amount you can borrow significantly while approving an application for a hotel unit mortgage.
You may still be able to borrow up to:
- 85% of the property value, if you are a first home buyer.
- 85% of the property value, if you are an investor.
- 80% of the property value (on a case by case basis), if you apply for a low doc loan.
You can check out our website for more details regarding hotel unit mortgages.
Cheers,
Otto
-
- Posts: 49
- Joined: Thu Jun 27, 2013 5:04 pm
Re: How do banks consider bed and breakfast loans?
I see. Thanks for the info, Otto.
I’ll make sure to surf through your website and call you if I want to learn more. Bye.
I’ll make sure to surf through your website and call you if I want to learn more. Bye.