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Hotel Unit Mortgage

How much can you borrow?

  • First home buyer: 85% of the property value.
  • Investor: 85% of the property value.
  • Guarantor loans: Borrow up to 100% with select lenders only.
  • Low doc: 80% of the property value (case by case basis).
  • Discounts: Some interest rate discounts may be available depending on the lenders that will accept your hotel unit as security.

Note: Most lenders restrict the amount you can borrow quite significantly if they approve the loan at all. In some cases, you may be able to borrow up to 95% of the property value, depending on the nature of the property.

Please call us on 1300 889 743 or enquire online and one of our mortgage brokers will call you to let you know if you qualify for a loan.

What are hotel conversions?

A hotel conversion is used to describe the process of converting a hotel into units. This typically occurs with older hotels that are being redeveloped and then sold off to investors.

Converted hotels and motels are sometimes quite similar to normal units. However, because they were formerly hotel rooms, they may not have some basic amenities like kitchens and bathrooms. In most cases, there are generally shared facilities on each floor.

Strata title hotel/motel

Hotel conversions are not to be confused with strata title hotel / motel properties.

These property types are still used commercially as hotels, however the individual rooms are owned by investors and rented back to the hotel. These types of properties have more in common with serviced apartments than normal units.

What about strata title hotel & resort properties?

If you are buying a property that is a unit located in a hotel and leased to that hotel then different lending guidelines apply.

  • First home buyer: Not applicable.
  • Investor: 80% of the property value for serviced apartment style hotel units.
  • Low doc: 70% to 80% of the property value.

Note: All properties of this nature are considered on a case by case basis depending on the nature of the leaseback agreement, size of the property, if it is self contained (contains a kitchen and bathroom) and strata or council restrictions on the property being permanently occupied.

Why are the banks so conservative?

Banks have strict policies when it comes to lending to borrowers who are purchasing converted properties.

This is because these properties do not appeal to as many people as normal houses. In some cases the units are used as a serviced apartment or cannot be legally occupied by the owner.

Ultimately, the bank wants to protect themselves from risk and also to protect you.

For this reason they limit the amount that you can borrow and assess the likelihood that the unit will be rented on an ongoing basis or that it will be able to be sold if you choose to do so in the future.

  • T20Kai

    Hi, I’m buying a unit located in a hotel, which is leased to that hotel, so how much can I borrow?

  • Hi there, if you’re a first home buyer than banks will generally decline your loan application. If you’re an investor then you can borrow up to 80% of the property value for serviced apartment style hotel units and 70% to 80% of the property value on low doc applications.

  • kwong

    When using BAS statements for a low doc loan, how many will be required?

  • Hey there, most lenders will require that you provide 12 months’ BAS statements. However, some of our lenders may be able to accept only 1 or 2 Business Activity Statements to assess your income.

  • Edgerton

    I’m a first home buyer and I haven’t made a decision on what type of property to buy yet. I’m just researching so I would appreciate if you could tell me how much grant I’m eligible to receive. This depends on the state I’m buying in though, doesn’t it?

  • Hello Edgerton,

    You can simply use the FHOG calculator to work out which government benefits you may qualify for. However, please make sure you read the tips for using the calculator, which follows directly under the calculator. Here’s the link to it:
    https://www.homeloanexperts.com.au/mortgage-calculators/first-home-owners-grant-calculator/

  • Ridge

    I’m thinking of doing some re-development, maybe a full conversion into a motel, and I would like to sell an old property to help with the finance later. I have never sold property before so I’d appreciate it if anyone can mention the costs involved in this selling process.

  • Hi,
    There are a few different costs that you’ll need to bear when selling a property you own. Some of these costs are necessary but some can either be reduced or even avoided completely. Please check out our costs of selling a property page to learn in detail about all this:
    https://www.homeloanexperts.com.au/home-loan-articles/costs-selling-property/