How To Finance Multiple Units On One Title

Buying a duplex, a block of units, or multiple dwellings on one title can be a strong investment strategy, but securing finance is usually more complex than for a standard house or apartment.

The key issue is whether the lender treats the property as a residential investment property or refers the application to its commercial lending division.

Lending Criteria Based On Unit Count

Different lenders will consider different types of multiple dwelling complexes including townhouses, houses, villas, semi-detached and fully-detached housing developments.

Duplex / dual occupancy

• First home buyer: 95% of the property value on a case by case basis.
• Investor:95% of the property value.
• Low doc: 80% of the property value.
• Construction:95% of the property value.
• 100% loans:Available with some of our lenders if you have a guarantor.
• Discounts:Competitive professional package and basic loan discounts are available.

Note: Many LMI (Lenders Mortgage Insurance) providers restrict lending for duplexes even though they are readily saleable and are excellent security for a loan.

We have access to lenders that can consider loans over 80% of the property value.

Up to 4 units / dwellings

• Investor: 80% of the property value
• Low doc: 60% of the property value
• Construction: 80% of the property value
• Discounts: Competitive professional package and basic loan discounts are available.

Note: Most lenders restrict the amount you can borrow quite significantly to around 70% of the property value. We deal with a few select lenders that can consider lending more on a case by case basis.

Up to 6 units / dwellings

• Investor: 65% of the property value.
• Low doc: 60% of the property value
• Construction: 70% of the Gross Realisation (the on completion value) or 80% of the hard costs (land value plus construction costs), whichever is less.
• Discounts: Competitive professional package and basic loan discounts are available in some cases.

Note: Most lenders restrict the amount you can borrow quite significantly, usually to around 60% of the property value or they will offer you a commercial loan at a higher interest rate.

We can still offer residential loans for this type of security through some of our specialist lenders.

You can often pay below the Bank Standard Variable Rate even though many other lenders would charge you commercial interest rates.

Up to 10 units / dwellings

• Investor: 70% of the property value (up to 80% on a case by case basis for very strong applicants).
• Low doc: 60% of the property value.
• Discounts: Competitive professional package and basic loan discounts may be negotiated with the lender for larger loans.

Note: Most lenders restrict the amount you can borrow quite significantly to around 60% of the property value or decline the loan outright.

We can consider large loans such as this at interest rates below the Bank Standard Variable Rate.

More than 10 units in one block / dwellings

• Investor: 70% of the property value.
• Low doc: 60% of the property value.
• Discounts: We have access to specialised commercial lenders who can consider approving your loan at close to the residential Bank Standard Variable Rate, which is far less than a commercial rate.

Many lenders will assess these properties as developments and will refer you to business banking.

You can borrow more than 70% of the property value using a residential development loan at a competitive interest rate.

Residential vs Commercial Loans For Multiple Dwellings

The secret to finding the best possible loan is to find a lender to assess your loan as a residential loan and not as a business or commercial facility.

Banks often refer loans for multiple units on one title to their commercial divisions so that they can charge a commercial rate and make more money!

If your loan is assessed as a commercial loan, the amount you can borrow, known as the Loan to Value Ratio (LVR), reduces significantly.

We can’t always get your loan assessed as a residential loan but we’ll always try to find you the cheapest lender for your property type.

Speak with one of our mortgage brokers today by calling 1300 889 743 or complete our free assessment form so we can find you the best deal available from our panel of lenders.

Why Multiple Dwellings Are High Risk

Buying a block of units can come with more risk than you’d normally experience when buying a standard investment property.

In particular:

• Blocks of units in remote locations, such as country towns, may be difficult to sell later on.
• All units are tenanted which can create trouble as less care is given to the building.
• If something goes wrong with the property, you have all your eggs in one basket.
• You’re heavily rental-reliant so a period of vacancy can cause financial hardship.
• There are less lenders willing to finance your block, meaning you may not be able to access your equity.

You should consider the risks and your own financial capacity before buying a block.

This type of investment is usually best-suited for high net worth individuals with substantial cashflow on standby.

Tips For Buying A Block Of Units

Consider The “Granny Flat” Alternative

If your primary goal is high rental yield, a house with a secondary dwelling (granny flat) is easier to finance at 95% LVR than a purpose-built block of units./p>

Research The Location

Avoid small regional towns with populations under 5,000. Lenders often maintain “blacklists” of postcodes where they perceive low demand. Stick to large regional hubs or metropolitan areas to secure the best LVRs.

Review The Maintenance History

In large blocks, if all units are tenanted, maintenance issues can go unreported for years. Ensure a thorough building inspection is conducted to assess structural integrity and compliance with fire regulations.

The Strata Title Strategy

Many investors buy a block of land under one title with the intention of converting it to Strata Title (subdividing). This can instantly “unlock” equity, as the combined value of the individual units is almost always higher than the value of a single block. Always check with the local council regarding fire separation and parking requirements before committing.

Ready To See What's Possible?

At Home Loan Experts, we treat your investment goals as our own. We manage the entire banking and application process for your first duplex or your next 10-unit block, allowing you to stay focused on your future.

Call us on 1300 889 743 or complete our free online assessment form to speak with a mortgage broker and secure your financing.