Investing in the right mining town can offer strong rental yields and attractive growth potential. With the right location, a suitable lender and a well-prepared application, you may be able to secure finance for a mining town property and take advantage of opportunities in Australia’s regional property markets.
How Much Can You Borrow For A Mining Town Property?
- First home buyer: 95% of the property value.
- FIFO worker: 95% of the property value.
- Investor: 95% of the property value (restrictions apply).
- Guarantor loans: Borrow up to 100% with select lenders only.
- Low doc: 60% to 80% of the property value.
- Discounts: There are competitive professional package and basic loan discounts available.
If you want to purchase a property in a mining town then call us on 1300 889 743 or enquire online and one of our mortgage brokers will be in contact to let you know which banks can approve your home loan.
How Do Banks Assess Mining Town Home Loans?
Location restrictions
Some lenders have location restrictions which are particularly conservative for mining towns that have populations of fewer than 10,000 people. Many lenders will restrict your loan to 80% of the property value so choosing the right lender is essential.
Rental income
Many lenders have official or unofficial policies which restrict the usage of rental income from ‘single industry towns’ when they calculate your ability to repay the debt.
Some banks will cap the rental return at 4% or 10% or will only use 60% of the rent income instead of the standard 80% that is normally used if the property is in a large town or capital city. As a result, you may find your bank saying that you can’t afford to buy more properties!
The good news is that some lenders will look at using a higher percentage of the rental income you receive on a case by case basis, allowing you to borrow more and grow your portfolio.
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If you have multiple properties in the one town then some banks will be unwilling to take on your application. This is risky for you as an investor as well as the bank.
Please try to spread your investments between different towns that focus on different resources.
We work with banks that have no location restrictions and an open minded view of investment loans used to buy in a mining town.
Please call us on 1300 889 743 or enquire online to find out how we can help you.
Which mining towns can be financed?
The commodities boom has caused house prices to rise rapidly all through regional Queensland as well as coastal areas of Western Australia such as Bunbury, Geraldton and Karratha.
As a general rule, we can finance houses in any town in Australia as long as there is demand for housing.
Some common mining areas we finance are:
- Galilee Basin QLD (Adani’s Carmichael coal mine)
- Hunter Valley NSW
- Bowen Basin QLD
- La Trobe Valley VIC
- Goldfields WA
- Pilbara WA
- The West Coast of TAS
Some specific mining towns we receive applications to finance are:
- Singleton NSW (Coal)
- Muswellbrook NSW (Coal)
- Hay Point QLD (Coal)
- Gladstone QLD (Coal, Alumina, Aluminium, Cement products & Liquid ammonia)
- Mount Isa QLD (Copper, Silver, Lead & Zinc)
- Moranbah QLD (Coal)
- Dysart QLD (Coal)
- Middlemount QLD (Coal)
- Blackwater QLD (Coal)
- Emerald QLD (Coal)
- Capella QLD (Coal)
- Clermont QLD (Coal)
- Biloela QLD (Coal)
- Moura QLD (Coal)
- Baralaba QLD (Coal)
- Karratha WA (Iron ore, Sea salt mining, Ammonia exports, Petroleum & Natural Gas)
- Geraldton WA (Iron ore, Nickel, Gold, Oil, Gas, Mineral sands, Copper, Zinc, Lead concentrate, Talc & Garnet)
- Port Hedland WA (Iron ore, Offshore natural gas & Manganese)
- Dundas TAS (Silver, Lead & Minerals)
- Zeehan TAS (Silver, Lead & Minerals)
- Adavale
- Alpha
- Augathella
- Aramac
- Barcaldine
- Blackall
- Charleville
- Hughenden
- Jericho
- Middleton
- Muttaburra
- Richmond
- Tambo
- Torrens Creek
Please contact us on 1300 889 743 or enquire online if you are not sure about your location.
How Mining Cycles Affect Property Prices In Mining Towns
Mining investment is driven by commodity prices, including those of iron ore, coking coal, and thermal coal.
A fall in commodity prices results in a progressive slowdown rather than a knee-jerk market reaction.
Investment in large infrastructure projects such as new mines, processing facilities and transport dries up, and there is little uptick in new jobs.
It’s worth noting that smaller mining towns tend to experience a sharper fall in house prices compared to larger suburbs with bigger populations.
Apply For A Mining Town Mortgage
Some banks will have restrictions depending on the location of the property that you are buying. Many of our lenders have no location restrictions and are open-minded when it comes to investment loans used to buy in a mining town.
If you are interested in investing in a property in a mining town then call us on 1300 889 743 or enquire online and our mortgage brokers will find the best home loan for you.
Frequently Asked Questions
Why Do Banks Restrict Loans In Mining Towns?
Banks tend to be very conservative when assessing a loan for a property in a mining town as security largely because of the possible risk of the boom ending and the town being deserted.
In particular, during the construction phase of a mine, there are often very high rent returns in the nearby towns, which may or may not continue in the long term. The lender can't do the same amount of research that you have done so they will take a conservative approach.
Remember, banks do not share your profit from any capital gains you may make but they do share your risk if the property decreases in value!
Thoroughly research the area that you are buying in to ensure that the mining is ongoing or that the town is economically viable without the mine.
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