Bushfire Prone Property
How much can I borrow?
Depending on the lender and the nature of the property, bushfire prone properties are generally assessed in the following ways:
- Low risk properties: You may be able to borrow up to 95% of the value of a property up to BAL-29.
- Medium risk properties: You may be able to borrow up to 90% of the value of a BAL-40 zoned property.
- High risk properties: You may be able to borrow up to 80% of the value of a flame zone property.
- Construction loans: You can borrow based on the the cost of the land and the building or the on completion valuation, whichever is less.
We can sometimes order multiple valuations with different lenders and then proceed with a lender that won’t give the property a high risk rating.
Call 1300 889 743 or complete our free assessment form to speak with one of our expert mortgage brokers.
Can I get approved?
Getting approved for a mortgage really depends on the zoning of the bushfire prone property.
The potential for attack is broken up into six Bushfire Attack Levels (BAL) each explaining the threat and the appropriate prevention measures to implement for the property.
If your property is in the Flame Zone then you are unlikely to be able to obtain finance.
We know how the banks will assess the property you want to buy so please call us on 1300 889 743 or fill in our free assessment form to discuss your situation with one of our mortgage brokers.
What is a bushfire affected property?
A bushfire prone area is an area of land that can support a bushfire or is likely to be subject to bush fire attack. Think properties surrounded by bushland or located within dense hinterland.
Bushfire prone land maps, which can be found at your local council, identify hazard zones and associated buffer zones.
Each state has its own criteria for mapping bushfire prone areas, which have been developed and are regularly reviewed in conjunction with the relevant states’ rural fire service authority:
- ACT Rural Fire Service
- Country Fire Authority Victoria
- Fire and Emergency Service Authority WA
- NSW Rural Fire Service
- NT Fire & Rescue Service
- QLD Fire & Rescue Service (Rural Fires)
- SA Country Fire Service
- Tasmania Fire Service
New development on areas identified as bushfire prone are subject to the development and planning controls of Planning for Bush Fire Protection 2006 and must be designed to improve the survivability of the development and its occupants.
What are BAL levels?
There are six BAL levels recognised Australia-wide. These levels are based on the region where you live, the vegetation type around your property, the distance from your home to individual vegetation types and the slope of the property:
BAL-LOW: Minimal attack from radiant heat and flame due to the distance of the site from the vegetation as well as from burning debris. There is insufficient threat to warrant specific construction requirements but residents should still do basic property preparation.
BAL-12.5: Attack by burning debris is significant with low levels of radiant heat. Radiant heat is unlikely to threaten building elements. Specific construction requirements for ember protection and accumulation of debris are required.
BAL-19: Attack by burning debris is significant with an increased radiant heat levels threatening some building elements. Specific construction requirements for protection against embers and radiant heat are required.
BAL-29: Attack by burning debris is significant and radiant heat levels can threaten building integrity. Specific construction requirements for protection against embers and higher radiant heat are required because some flame contact is possible.
BAL-40: Increased attack from burning debris with significant radiant heat and the potential for flame contact. The extreme radiant heat and potential flame contact could threaten building integrity. Buildings must be designed and constructed in a manner that can withstand the extreme heat and potential flame contact.
Flame Zone: Radiant heat levels (exceeding 40kW/m²) and flame contact are likely to significantly threaten building integrity and result in significant risk to residents who are not adequately protected. The flame zone is outside the scope of the Building Code of Australia and the NSW Rural Fire Service may recommend protection measures where the applicant does not provide an adequate performance solution, such as drenching systems and radiant heat shields.
To meet the complying development criteria under State Environmental Planning Policy (Exempt and Complying Development Codes) 2008, the property must be assessed as below BAL-40.
Why are the banks so conservative?
Apart from injury and the tragic loss of life, the economic costs of bushfires are significant. In fact, according to estimates from the Australian Institute of Criminology, an average year will see insurable losses of $80-$100 million.
Despite these sobering statistics, the likelihood of your home loan application getting approved comes down to the bank’s valuation.
Valuers themselves may take into account the BAL level of the property when they assess it but what they actually return to the bank in their report is a risk rating on a sliding scale from 1 to 5.
Some of the factors they consider are location, land and environmental issues. If the property rates either 4 or 5 on this scale, the valuer will provide specific comments in their report that the property falls within a high risk bushfire zone.
If the property is risk rated higher, e.g. countryside homes or large rural properties, it has a detrimental impact on the marketability of the property, something banks and their mortgage insurers want to steer clear of.
Lenders themselves don’t have location restrictions for bushfire prone property, albeit most lenders apply postcode restrictions that relate to the size of the town or city in which the property is located and its distance from metro/city areas.
As with any security being assessed, the bank’s risk team will carefully consider their existing exposure to a particular area.
If they’ve had 17 properties affected by bushfire in a particular location, for example, they’ll be very conservative in their assessment of future home loan applications for that location. If there isn’t much existing exposure, the lender may be more flexible in accepting the property.
Do I need bushfire insurance?
You’ll be required to take out building insurance no matter what type of property you purchase (other than strata property) but the coverage required will need to be specific to bushfires.
The property will need to have all of the relevant safety and preventative measures in order to get sufficient cover. If it’s an existing property within a known bushfire affected area, it is likely that it has had at least some kind of damage to it in the past which means it’ll likely have the required preventative features to be covered for insurance.
If it’s missing basic measures, such as roof sprinklers or a water tank, we may still be able to get you approved as long as you can provide an assurance that you’ll be making the required changes within a 3 month period.
Please call us on 1300 889 743 or fill in our free assessment form to find out if we can get you approved for a home loan.
Is it expensive to build in a bushfire zone?
The Environmental Planning and Assessment Act 1979 establishes a system for requiring bushfire protection measures on bushfire prone land at development application (DA) stage.
In order to meet the requirements of Planning for Bush Fire Protection 2006, applications must consider the following six bushfire protection measures:
- Asset Protection Zones (fuel reduced areas)
- Access arrangements
- Building construction and design
- Water supply and utilities
- Emergency Management Arrangements
The additional cost for building in a bushfire prone area depends on the zone and the measures that need to be implemented.
Flame Zone properties, for instance, are quite expensive to build and most lenders won’t accept these properties.
Windows may need to be fitted with bushfire shutters or metal frames but timber and door frames may still be permitted as long as they have been bushfire tested.
Water tanks, sprinkler systems, metal fly-screens, rooves and fascias are also mainstays on new homes in high risk bushfire prone properties.
Apply for a bushfire prone property mortgage
Unlike other mortgage brokers, we understand what the bank’s credit policy guidelines are and we are able to mitigate the risk of the bushfire prone property based on what the credit assessors are looking for.
Want to buy a property that happens to be in a bushfire affected area?
We can present a strong case and find a lender that has a flexible lending policy in relation to bushfire prone properties.
Call us today on 1300 889 743 or fill in our free assessment form and discover why we’re the experts in getting finance for bushfire affected properties.