Duplex Loan

Dual-occupancy homes are becoming increasingly popular as an alternative to single dwellings in areas where land is in short supply.

Many people are approaching major banks to seek finance, only to find that the lending criteria differ from those for single dwellings.

What Is a Dual Occupancy Home?

A dual-occupancy home is a property with two separate dwellings built on one lot.

The simplest example is a main house with a granny flat. It is also called a secondary dwelling or accessory apartment, and is usually a smaller home located on the same block as the primary residence. It may be used for older relatives, guest accommodation, family privacy, hobbies, work, or rental income.

Another common type of dual occupancy is a duplex. It usually has two homes on the same lot, often sharing a common wall. Sometimes, an existing house can also be converted into two separate homes by adding extra walls, entrances, kitchens, or bathrooms.

Larger versions of this same idea also exist. A property with three dwellings may be called a triplex, while one with four dwellings may be called a fourplex or quadruplex.

The main thing to understand is that dual occupancy refers to multiple dwellings on one block of land. A duplex is one type of dual occupancy, while a granny flat is another. This is different from a townhouse, where each dwelling is usually on its own separate title or lot.

How Much Can You Borrow For A Duplex Or Dual Occupancy Property?

• First home buyer: 95% of the property value.
• Investor: 95% of the property value.
• Low doc: 80% of the property value.
• Construction: 95% of the total cost of the land and contract price to build the duplex.
• Guarantor loans: Borrow up to 100% with select lenders only.
• Discounts: Competitive professional package and basic loan discounts are available.

The majority of lenders restrict the loan amount for duplexes to below 80% of the property value, or 60% for low doc loans. We deal with banks that are willing to consider lending more, depending on the location and value of the duplex.

No matter the LVR restrictions, you may be able to borrow the full costs of the purchase by using a guarantor.

Please call us on 1300 889 743 or complete our free assessment form and one of our mortgage brokers can help you to get approved.

How Lenders Assess Dual Occupancy Properties

Many lenders are very risk averse when it comes to the types of properties that they accept as security.

They may take a strict approach to dual occupancy homes and may prefer to decline good loans rather than take the chance that they may lose money on some of their mortgages.

These types of lenders are highly unlikely to allow you to borrow more than 80% of the property value.

Each lender has their own opinion about the risks associated with a duplex or dual occupancy. Generally, their policies are created using data from their previous loans.

If one lender has had trouble selling several duplex properties or has had a significant loss on several mortgages, then they may adjust their maximum LVR for all properties with more than one dwelling on a single title.

Why Duplexes And Dual Occupancy Properties Can Be Harder To Value

Yes. Bank valuers use comparable sales in the local area to determine the value of your property. If you’re buying the property then they will usually value the property at the contract price.

If you already own the property then they may be a little conservative because they will have trouble finding other dual occupancy properties that have sold in the area and do not have the contract of sale as additional evidence to support their valuation.

In capital cities, they may use a wider search area to compensate and, as a result, the valuer can normally find enough comparable sales of duplexes, dual occupancies, properties with granny flats and houses converted into two units.

In smaller towns, this can be difficult because there is almost certainly going to be a lack of comparable sales. As a result, the bank valuer may be more conservative.

If you’re looking to purchase a dual-occupancy dwelling and wish to apply for finance, please call us on 1300 889 743 or fill in our free assessment form today.

Duplex Construction Loans And Subdivision

If you own a large block of land with a wide frontage then you may be allowed to build a duplex and then subdivide into two torrens or strata titles.

However, there are a few common problems faced by investors who decide to build a duplex, these are:

• Banks typically value the property as one block not two even though your subdivision is approved.
• Many lenders would consider this to be a development loan and would therefore charge a higher interest rate.
• You can’t usually borrow based on the ‘on completion value’.
• Most lenders won’t lend you the funds to pay for the additional costs such as council approval and subdivision expenses.

The solution is to apply with a lender that can lend on the ‘on completion value’ of two separate titles as opposed to a valuation ‘in one line’, which is significantly lower.

If you need help to finance the construction of a duplex then please call us on 1300 889 743 or fill in our free assessment form today.

Buying A Dual Occupancy?

Many lenders have strict rules around duplexes, granny flats and multiple dwellings on one title, but the right lender may still say yes.

Our mortgage brokers know which banks are more flexible with unusual property types and can help match you with one that fits your situation.

Call us on 1300 889 743 or fill in our free online assessment form to find out your options.