When material is mined from underground, the land above can alter and shift, which can impact buildings and other structures. The various movements of the surface and subsurface are known as mine subsidence.
Each situation is different and needs to be assessed by lenders according to the local conditions.
How much can I borrow?
- You can borrow up to 95% of the purchase price with some lenders or up to 100% by using a guarantor.
- You will need to provide a Mine Subsidence Board (MSB) certificate prior to loan approval.
- The bank valuer must recommend the property as suitable security for a mortgage.
- All loans are assessed on a case-by-case basis.
In many cases, the valuer for one lender will make comments in their report that results in your loan being declined.
We can order valuations with other banks and confirm which lenders will approve your mortgage!
If you want to purchase a home in a mine subsidence district, contact our expert mortgage brokers on 1300 889 743 or enquire online.
How do banks view mine subsidence?
If you buy in an area that is near a mine subsidence district, or is not on top of an old mine, then it is accepted as a normal security. As a result, you will be able to borrow up to 95% of the property value.
The major concern for lenders is the properties built very close to or even on top of old mines.
They could potentially have huge pockets of unfilled land beneath so the banks rely heavily on valuers’ comments to determine how much you can borrow.
If the property is close to an area within the Mine Subsidence District known to have issues, then the banks can restrict the LVR as the risk gets higher and the property gets closer to the mines.
The best way to find out whether your property is at risk is to be informed and contact a local valuer.
The risk is not only to the bank but to you as the buyer – the last thing anyone wants is to have the family home collapse.
What are mine subsidence districts?
Mine Subsidence Districts are areas that can potentially be affected by ground movement as a result of underground mining, particularly coal mining. Structures within these districts must adhere to building guidelines so they can withstand ground movement.
These controls are overseen and implemented by the Mine Subsidence Board (MSB). When buying a property, the purchaser is notified that they are buying in a Mine Subsidence District at the time of purchase.
MSB no longer issues 15B certificates
As of 30 September 2019, the Mine Subsidence Board (MSB) no longer issues 15B certificates.
The problem is that lenders still require these certificates to lend in mine subsidence areas.
We recommend that you talk to the seller of the property to see if they have an old 15B certificate from when they purchased the property.
If this does not work, then refer your lender to the MSB website and let them know that this is no longer available.
You may need to apply with another lender if you are unsuccessful.
Is mine subsidence high risk?
In general, mine subsidence is not high risk but there are always some risks when building in a mine subsidence area.
The risk increases if the property is built near, or on top of an old mine. Risks such as landslides increase within these areas. As long as your property is not in one of these areas then it is fine. Anywhere not near or on a landfill are treated as normal property.
To find out whether your property is at risk, contact a valuer. Local valuers know the area where you plan to purchase a property. They are also able to contact council about mine subsidence areas.
In general, if the valuer is unsure whether the area is a high or low risk, the banks automatically assume it is a high risk area.
How do I select the right property?
There are three things you should do when buying in a mine subsidence district.
- Speak to a local real estate agent: Local real estate agents have a good understanding of the local area. They would know if there were issues with past borrowers when trying to finance a property.
- Get a valuation report: If you are unsure whether a property is impacted by mine subsidence then get a local valuer to assess the property. A valuer will know the area well, is able to contact the local council about each Mine Subsidence District and can provide an unbiased report.
- Put an extended finance clause in place: A finance clause provides the banks with more time in case the property has to go to a credit or mortgage insurer. An extended finance clause is longer than a normal finance clause. It allows up to 10 days instead of 5 days.
Can I cover my house for mine subsidence damage?
Any surface improvements that the Mine Subsidence Board authorises are protected by the Mine Subsidence Act of 1961.
This means, that any damage to authorised improvements as a result of mine subsidence is covered by the Board, which is funded by a levy on the New South Wales mining industry.
If a building was constructed before the Mining Subsidence District was declared, or the building is outside of the district, then you are automatically covered for mine subsidence damage.
It can be difficult to get cover from insurers for certain properties in a mine subsidence district.
What is an MSB certificate?
A Mine Subsidence Board (MSB) certificate declares that you have met certain Board requirements.
Many banks will not lend money to purchase a home in a Mine Subsidence District unless a certificate has been obtained.
There are two main certificates available from the Mine Subsidence Board
- Section 15B Certificate: A Section 15B Certificate relates to whether the Board requirements for improvements and subdivisions has been met. If these improvements meet Board requirements, then they are eligible for compensation if mine subsidence damage occurs. The certificate costs $50.
- Section 15C Certificate: A Section 15C Certificate identifies whether or not a claim has been previously paid, or is awaiting assessment of existing mine subsidence damage to a property. The certificate costs $25.
Details that you will need to supply to the Board
All applications to the Board must include the following property details
- Lot or portion size
- Deposited plan: The legal boundaries of the land. This is often a record of subdivisions, easements, and resumptions.
- Mining Subsidence District section number (if applicable)
- House number
- Street and suburb
What areas are affected by mine subsidence?
Any areas that are mining towns or have older mines within the area can be affected by mine subsidence. Areas within NSW include:
- East Maitland
- Hue Hue
- Killingworth / Wallsend
- Lake Macquarie & extension
- Mitchells flat
- Patrick Plains
- South Campbelltown
- Swansea North Entrance & Extension
- West Lake
- Some parts of Newcastle City Central
How to apply for a mortgage
If you are looking to purchase a home in a Mine Subsidence District and need finance, please call us on 1300 889 743 or enquire online today.
We can help you apply with the right lender that will approve your mortgage, regardless of the potential risk involved.