Can I get a home loan to buy a property on Scotland Island?

Any general questions you might have in regards to loans and finance.
Pradhan
Posts: 6
Joined: Tue Mar 20, 2018 9:20 pm

Can I get a home loan to buy a property on Scotland Island?

Postby Pradhan » Thu Jun 14, 2018 1:42 pm

Hi Home Loan Experts,

I’ve found a beautiful holiday house worth $410,000 which I want to purchase. I have around $70,000 saved up in the bank and I’m renting.

The house I’m interested in buying is on Scotland Island, north of Sydney. I had a chat with my real estate agent friend who said something about banks not approving home loans for island properties? She suggested I talk to you guys.

So can you guys help me get a home loan?

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Otto Dargan
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Location: Sydney, Australia
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Re: Can I get a home loan to buy a property on Scotland Island?

Postby Otto Dargan » Thu Jun 14, 2018 3:00 pm

Hi Pradhan. Welcome to the forums.

Island and water access properties are considered speciality properties because they are disconnected from the mainland, i.e. they are located on islands that are not linked by bridges.

These properties are hard to sell because of the difficulties in accessing the property and the demand is low. As such, the property couldn't be sold fast and the banks are likely to make a loss if they were to sell in case of default. This increases the risk to the lenders, which is why they may be reluctant to approve your home loan application.

From the details you've provided, it looks like you're looking to borrow around 83% loan to value ratio (LVR). Some lenders might not be comfortable lending over 80% of the property value other than for Tasmanian properties.

However, some of our lenders will assess each mortgage application on a case by case basis depending on the location, accessibility and the type of the property.

Also note that most lenders may have certain postcode restrictions on these properties since these areas are particularly riskier than others. Please note that the lenders tend to favour highly populated areas or suburbs such as Hobart and Launceston rather Sydney.

Please call us on 1300 889 743 or enquire online and find out if you qualify for an island access home loan.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Pradhan
Posts: 6
Joined: Tue Mar 20, 2018 9:20 pm

Re: Can I get a home loan to buy a property on Scotland Island?

Postby Pradhan » Thu Jun 14, 2018 4:34 pm

It seems good. I was wondering whether lenders accept the rental income from the property when calculating my borrowing power? I'm thinking now that I might purchase the property as a holiday home and rent it out for part of the year. Meanwhile, I'll stay in my current home for a bit longer to take advantage of capital growth.

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Otto Dargan
Mortgage Specialist
Posts: 7021
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Can I get a home loan to buy a property on Scotland Island?

Postby Otto Dargan » Thu Jun 14, 2018 5:58 pm

Hi Pradhan,

Banks may consider rental income from a holiday home only if a suitable lease arrangement is evident. What this means is you need to have a proper, legal lease arrangement with the tenant, and provide a copy of this along with your home loan application.

Please keep in mind that not all lenders assess your rental income in the same way. Most banks will consider 80% of the rent income but some lenders may only take 75% of the rent income into consideration when calculating your borrowing capacity.

The main reason many lenders accept 80% of your rent income is because it’s assumed that 20% of your rent income will be used for council rates, strata fees, repairs and to cover for any vacancies.

You could talk to one of our mortgage brokers who can give you professional advice on how to create a strong mortgage application. Call us on 1300 889 743 or enquire online.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Pradhan
Posts: 6
Joined: Tue Mar 20, 2018 9:20 pm

Re: Can I get a home loan to buy a property on Scotland Island?

Postby Pradhan » Thu Jun 14, 2018 7:24 pm

Thanks, Otto. My friend was right; I bet your team can help me. Will be in touch at the earliest.


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