Can I still get a home loan?
A limited title property is a residential property that doesn’t have a properly defined location or clear boundaries.
These older types of houses may not be acceptable to all lenders so what can you do to make sure you qualify for a limited title property home loan?
How much can you borrow?
- You can borrow up to 95% of the property value with some lenders.
- You’ll generally need to lodge a plan of survey report with your state’s relevant land and titles office.
- Legal and title search fees will apply.
If you want to buy a property which is on a limited Torrens title, please call us on 1300 889 743 or fill our online assessment form and we can help you qualify for a home loan.
Why don’t all lenders accept limited Torrens title properties?
If the boundaries or the location of the property aren’t clearly defined by a surveyor, various third parties may make an interest claim to all or part of the land parcel.
This can potentially make it difficult for lenders in the event that you default on your mortgage and they’re required to sell your home.
Banks’ main concern is with the saleability of the security property so they prefer standard residential properties in metro locations (Category 1 and 2) locations on Torrens or strata title.
Check out our postcode calculator to discover whether your location is considered risky for the banks.
You may also want to check our property types section to find out what banks consider to be high risk real estate and what you can do to qualify.
Do I need to order a survey report in order to qualify?
In many cases, the bank may require you to lodge a plan of survey, also known as a plan of delimitation or plan of redefinition, with your state’s land and title registry office.
Your solicitor can organise this on your behalf:
- The lands and title office will check the last 30 years records of the land.
- A surveyor will then inspect the land to determine whether the land matches the description in the deed provided by the vendor (seller of the property).
- A survey plan will be required to be drawn if the boundaries aren’t properly defined and so the notation or limitation can be removed from the title.
- The survey report will then be provided to your solicitor, who can notify your bank as part of your home loan application.
Call us on 1300 889 743 or fill in our online enquiry form and we can help you!
How much does it cost?
There are generally a few costs involved in ordering a plan of survey report, including:
- $1,200 to lodge your application with your land titles office.
- $250 for a standard title search or $50 for an Old System title search.
- $1,500-$3,500 (plus GST) for the plan of redefinition report.
We highly recommend that you speak with your solicitor to find out the exact fees for your state and whether you need to order a survey report at all.
How long will it take to survey the land?
You generally need to allow about 4-6 weeks for registration so you should factor this in when negotiating the settlement date with the vendor and your moving schedule.
What is limited Torrens title?
Prior to the introduction of Torrens title in 1862, there was no formal system to register land title in Australia.
These early parcels of land were transferred to owners under what is referred to as Old System title.
Properties that later switched from Old System title to Torrens title would have a note or limitation placed on the property title explaining the boundaries of the property have not been clearly defined.
Can limited title properties be found in all states?
Limited title properties are most common in old inner city suburbs in Sydney like Newtown and Marrickville and in some locations in rural New South Wales.
In saying that, limited title properties can also be found in Victoria, South Australia and Western Australia.
Different legislation and land title registries apply to each state:
- Lodge your plan of survey with Land and Property Information (LPI) – Real Property Act 1900 (NSW).
- Lodge your plan of survey with Landgate – Transfer of Land Act 1893 (WA).
- Lodge your plan of the survey with the Land Titles Office (LTO) – Real Property Act 1886 (SA).
Can the land size change drastically after a survey?
It’s very case by case.
Sometimes an excess of land is found which you can claim but sometimes the advertised land size can reduce.
Generally speaking, if a redefinition of boundaries is required, there can be differences of between 10m2 (give or take).
For rural limited title properties, there can be even larger differences in land size.
What’s the difference between a qualified title and a limited title?
A qualified title property is a normal Torrens title property carrying a warning that the land is held subject to any other person’s interest that may exist.
It’s similar to a limited title in many ways but tends to affect older properties in Victoria.
Both property titles may entail some additional costs in order to get approved for a home loan.
Limited title: Case study
- Purchase his first home.
Having found his ideal first home, John* got in touch with us looking for a home loan.
The NSW property was valued at $1.5 million and was located in a great neighbourhood.
With a clear credit history and a great annual income of $200,000 plus allowances, the loan pre-approval was pretty straightforward.
The formal approval soon followed.
Generally, the bank’s mortgage processing services send out the Loan Agreement within the next few days. The Loan Agreement contains the details of the loan and the terms, conditions and fees applicable to the loan.
However, before they issue the Loan Agreement, they run a title search. This is where most loan application for limited titled properties run into issues, leading to delays and often to getting knocked back.
The bank refused to send the Loan Agreement as is!
After a discussion with the bank, they confirmed that they’re happy to accept an Identification Report of the Property by a surveyor. They agreed to issue the Loan Offer Document once the surveyor report is provided.
We discussed the issue with John and commissioned a surveyor to do the report.
Generally, conveyancers or solicitors are an expert in this area and know how to arrange it. It cost approximately $1,800 and took around 2 weeks to complete.
Once we obtained the report, it was smooth sailing. We settled the loan, and John moved into his first home soon after.
What’s more, later on, with the help of a solicitor, John removed the limited title status by the lodgement of a plan of survey at the Land and Property Information (LPI).
The key with limited title properties is to understand that there will be extra expenses and additional work involved when buying these types of properties.
*Customer name changed to protect privacy.
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