What is a company title unit?
A company title is an older style of title that was commonly used for blocks of units before strata title became common around the 1960s.
The block of units is owned by a company and ownership of shares in the company denots ownership of a particular unit.
Ownership of particular shares in the company denotes ownership of a particular unit. The main problem with company title properties is that the consent of the other owners may be needed to sell, lease or mortgage your unit.
How much can you borrow?
- First home buyer: 85% of the property value.
- Investor: 85% of the property value.
- Guarantor mortgage: 100% of the property value plus costs.
- Low doc: 60% of the property value (80% is available if you have BAS statements to support your income).
- Discounts: Competitive professional package interest rates available.
Do you need help to finance your purchase?
Please call us on 1300 889 743 or enquire online.
One of our mortgage brokers will call you to let you know if you qualify for a company title mortgage.
Why are the banks conservative?
Banks tend to restrict Loan to Value Ratios (LVRs) for company title properties because of the difficulty in selling in the event you default.
Because you’re not issued with a Certificate of Title over the property, banks don’t actually use a ‘mortgage over land’.
Instead, they take security over the shares you own in the company.
The nature of the ownership structure requires permission from other owners to purchase these shares, not to mention the additional administration costs that apply.
Fewer people are interested in buying into a company title unit which means the sale process usually takes longer as well.
Although many modern day company title apartment blocks have less restrictions than the older blocks from the 1960s, they are still assessed in the same way by Australian banks.
Why are small blocks harder to finance?
Recently some banks have had trouble registering their charge over the shares in the company for small blocks of units.
For this reason some lenders have put in place a policy that they won’t finance a unit if the block has less than five units.
They also ask for some additional information:
- A full bank valuation is required.
- Memorandum and articles of association of the company.
- ASIC search confirming the company is a Home Unit Proprietary Company.
We have lenders that will accept apartments in small blocks (1 – 4 units) on a case by case basis.
Fill in our online enquiry form and tell us about the property you have in mind.
What about company share title?
In Victoria, company title is known as a ‘company share title’.
This is also acceptable security for a home loan with some lenders.
What about a company title duplex or townhouse?
It’s often easier to get permission to buy or sell because there is only one other tenant that you need to get permission from.
What are the pros of a company title property?
- They tend to be cheaper than strata title properties
- You can money on by avoiding the costs associated with strata units like insurance and administration
- Resolving disputes can be easier because you don’t have to go through an approval process or adhere to any strata by-laws.
What are the cons of a company title property?
Because the block of units is company-owned, the board of directors are really cautious as to who they allow to buy or rent.
They are more risk-averse than a private vendor or landlord and focus on only approving good quality tenants.
- The tenant approval process varies from company to company so you may not be approved if you have anything from a minor criminal record to no prior rental history
- In turn, your tenants may not be accepted by the board and there may be restrictions on whether you can rent out the unit at all
- Because they tend to be older buildings, buyer demand is lower so rental returns and capital growth outcomes don’t tend to be as strong
- You don’t hold legal ownership over the unit but, rather, a share so there can be signficant implications
- The tenant or shareholder approval process means selling or renting out the unit can take longer than a strata property or a detached dwelling (a standard house)
- A company title may not have by-laws like strata but company constitutions can have really restrictive rules such as what can be done to the property and even how much you can borrow
Apply for a company title home loan
Borrowing money for a company title unit is not as straight forward as getting a home loan for a normal apartment.
By working with a specialist mortgage broker, you can find out who will lend you the maximum loan amount based on your situation.
You may even quality for an interest rate discount.
Please enquire online or call one of our mortgage brokers on 1300 889 743 to discover if you qualify for a company title mortgage.
Low doc loans are available for some types of company title properties depending on your situation and the location, saleability and legal structure of the title.