Your borrowing power might be limited!

Australian banks consider properties that are worth more than $3,000,000 to be a luxury residential property ($2,000,000 in some states).

These properties are typically located in capital cities and are owned by high net worth individuals.

Surprisingly, some banks can limit your borrowing power so it’s all about choosing the right lender.

How much can you borrow?

  • First home buyer: 80% of the property value for loans over $1,000,000 and 75% of the property value for loans over $2,000,000.
  • Investor: 80% of the property value for loans over $1,000,000 and 75% of the property value for loans over $2,000,000.
  • Guarantor loans: Borrow up to 100% with select lenders only.
  • Low doc: 60% of the property value for loans over $1,000,000 (no maximum).
  • Discounts: Competitive professional package and basic loan discounts are available. We usually negotiate with several lenders to find the best possible offer based on your situation.

Note: Most lenders restrict the amount you can borrow to 70% or less of the property value. Several lenders specialise in lending for these properties and can lend up to 80% of the value on a case by case basis. Some lenders refer to these types of loans as “jumbo loans” or “high value loans”.

Please enquire online or contact us on 1300 889 743 and our mortgage brokers will provide you with expert advice on the amount you can borrow for a luxury property.

Negotiating a great rate discount

Different banks are willing to negotiate different rate discounts depending on their funding position and their targets for new lending. Lenders that are already too busy with applications to process are less likely to give larger discounts.

So how do you find the cheapest lender? You can either call every lender yourself or use a specialist mortgage broker that can negotiate on your behalf directly with the pricing department of the major banks and other lenders.

Please remember that the rate isn’t all there is to choosing a home loan! Often larger loans have restrictive terms and conditions, hidden costs or high exit fees. Please check the loan offer you are issued to make sure there are no hidden surprises.

Maximising your loan amount

If you have a high income but a relatively small deposit then your main goal should be to have the highest possible loan to value ratio (LVR) for your loan. This is the percentage of the property value that you are borrowing.

In some cases, we are able to negotiate LMI approval (80% to 95% loans) for loans over $1,000,000 or extend a lenders maximum loan amount to 80% for loans over $3,000,000 on a case by case basis.

Why are the banks so conservative?

Banks are in an unusual position when dealing with customers applying for home loans greater than $1,000,000. Larger loans, particularly loans over $2,000,000, represent a much higher risk than a loan of say $300,000. In particular, penthouse apartments are often in the CBD of a capital city which means that it may be subject to larger price fluctuations than other properties.

In addition to this, lenders often give a special rate discount so their margins are much smaller. They are eager to do business with you because they make more money from larger loans but they are also hesitant because of the larger potential loss!

The rule of thumb is that lenders will give special rate discounts but are also more likely to decline the loan. For this reason it is important to not just look at the potential discount but also look at how comfortable that particular lender will be with your personal situation.

Unique property case study

Chris and Julie wanted to sell their heritage-list home in Fitzroy to buy an apartment closer to the Melbourne CBD.

Their bank valued their home at $2.5 million 5 months ago but when it came time to sell, it sold for $1.8 million. That’s $700,000 less than the bank valuation!

What went wrong?

  • It’s almost impossible to find comparable sales on heritage-listed property which makes it difficult to come to a fair valuation.
  • The land size is over 2,500m² but the house itself only has two bedrooms.
  • Luxury property worth over $2 million can fluctuate in value much more than standard residential dwellings.
  • At the time the couple wanted to sell, the Melbourne real estate had weakened and it’s typically unique properties that are hit with the most conservative valuations.

Unfortunately for Chris and Julie, the real estate market can change pretty quickly and this can affect the bank’s decision in how much they’re willing to lend, particularly for luxury homes.

Luckily for the couple, they purchased the property for $6000,000 around 10 years ago and they were to pay out the remainder of their mortgage and buy their unit.

They were obviously disappointed about selling their property for $700,000 less than what they were expecting but it could have been worse!

How to apply for a mortgage

Not sure whether you’ll get approval for a home loan?

Call 1300 889 743 or enquire online and one of our specialist brokers can tell you which lenders can finance your luxury property.

  • LeahP

    Says up there that I can borrow up to 75% of the property value for loans over $2 million but my bank said they won’t go over 70% LVR. That 5% makes a huge difference for me, especially considering the high LVR. Can you help?

  • Hi there,

    Yes, we can help you with this, however, we will need to properly assess your situation and find out just why your bank has limited you to 70% LVR. We can then help you apply with a lender that can be more flexible towards your particular situation and allow you to go for 75% LVR, if we aren’t able to negotiate that with the bank you went with before. Please speak with one of our expert mortgage brokers by calling 1300 889 743 or one of us will contact you instead if you simply enquire online:

  • Redmond

    I have over $2 mils in net assets and I want to borrow around $3 mils or around that to invest in more. This includes a luxury property purchase too. Are your brokers able to handle this?

  • Hey Redmond,

    Our team of specialist mortgage brokers can help with our exclusive ‘High Net Worth Clients’ package, which you may qualify for. This will include specialised pricing as well as special services that can help you a lot to grow your investment portfolio. Please check out our high net worth clients page for more information:

    You can discuss your situation and loan needs with one of our experts by simply calling 1300 889 743.

  • Schultz

    Hi, what if the property is for commercial purposes? How much can I borrow for a property priced at $2 mil up to $4 mil?

  • You may be able to borrow up to 75% of the property value for loans up to $2 mil but for loan amounts higher than that, up to $5 mil, this may be reduced to 70% of the property value. If you can provide a residential property as security then you may be able to borrow 100% though.

  • Ror

    We already own a property but we’d like to buy another with the help of our parents as guarantor. We heard from a friend that banks don’t generally accept existing homeowners for guarantor mortgages so we’d like to get clarified on if this is fully true.

  • Hi Ror,
    Yes, many lenders will not allow second home buyers to apply for a guarantor loan as they expect that they should have a strong enough asset position to buy a property on their own. However, we know which lenders are less conservative when assessing their guarantor loans so please feel free to contact us on 1300 889 743 to discuss this with one of our guarantor mortgage specialists.

  • Minis

    But is there a way to borrow 100% for a commercial property purchase with the help of a guarantor just like for residential?

  • Yes, but if it’s a specialised commercial property then it’s rare to find a bank that can accept this. You can find out more about commercial property guarantor loans here: