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Mining Town Mortgage

Property investors who buy in the right mining town can make big short-term capital gains and receive outstanding rental returns. The only question is, which town to invest in?

Find out which mining towns are in the middle of a housing boom and whether you are eligible for a home loan.

How much can you borrow?

  • First home buyer: 95% of the property value.
  • Investor: 95% of the property value (restrictions apply).
  • 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 will the banks assess my loan?

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.

Concentration risk

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.

Why are the banks so conservative?

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.

If need be, seek independent financial advice before proceeding with your investment.

Which mining towns can be financed?

The commodities boom has caused many housing booms 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:

  • 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)

Please contact us on 1300 889 743 or enquire online if you are not sure about your location.

The mining sector and house prices

Mining investment is driven by the price of commodities including iron ore, coking coal and thermal coal.

A fall in commodity prices results in a progressive slowdown rather than a kneejerk 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.

In 2016, Corelogic found that the mining slowdown saw house prices fall in many locations, with one particular mining town experiencing a peak fall of 78%!

Specifically, house prices in this town fell from $620,000 in November 2012 to $138,390 in November 2016.

Applying 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.

  • Ace

    My agent says that the mining town I’m considering to invest in is on a Cat 3 location. What does this mean and will it affect my mortgage?

  • Hi Ace,

    A cat 3 location isy considered to be medium to high risk by the lenders and it generally represents smaller towns with fluctuating property markets. This can result in a more strict assessment making it a bit tough to qualify for a great deal. You can give us a call to discuss this with one of our mining town mortgage specialists.