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Mortgage Postcode Restrictions

Almost all banks and major lenders in Australia have a location guide or postcode list that determines their maximum loan amount and lending policy for each location in Australia.

Locations are put into categories based on their population, real estate values, local economy and likely future of the area.

You can use our Postcode Location Guide to find out which category your property is in.

How much can you borrow?

  • First home buyer: 95% of the property value (restrictions apply).
  • Investor: 95% of the property value.
  • Low doc: 80% of the property value on a case by case basis.
  • Discounts: Competitive professional package and basic loan discounts are available.

The majority of lenders will lend up to 90% of the property value for houses that are in towns with more than 10,000 people.

Your Loan to Value (LVR) will be restricted for smaller towns or outlying suburbs.

Low doc loans are often restricted even to larger towns of 15,000 or 20,000 people.

One of our lenders will accept any property under 50 hectares no matter the town, suburb, location or postcode.

Using a guarantor is one way to get around LVR restrictions because you don’t need a deposit and can borrow the full costs of the purchase.

Please call us on 1300 889 743 or enquire online and one of our mortgage brokers will help you to get your mortgage approved!

Why are the banks so conservative?

Smaller towns and remote locations tend to have lower real estate sales.

In the event that you want to sell your property, you may have to wait several months or even years to find a buyer. This is particularly true if the local economy is suffering due to a drought or local industry closures.

Because of this, banks view smaller towns and remote areas as a higher risk and restrict the amount you can borrow.

Why are comparable sales important?

You may find that some lenders will accept properties in a particular location as security but will then decline your loan due to a lack of comparable sales!

Lenders require their valuers to provide three comparable sales to support their estimate of the market value of your property. Comparable sales are only accepted if they have sold within the last six months, they are similar to your property (e.g. land size / property type) and if their sale price is within 10% of the value of your property.

For example, if your property is a 20 hectare hobby farm worth $500,000 then the valuer would not be able to use a sale of a unit in town as a comparable sale. In addition, they cannot use a similar farm next door that sold two years ago.

Small towns can be a big problem! If you are in a remote location then the property market will not be very active and as a result the bank valuer will be unable to find comparable sales.

The great news is that some lenders can accept properties even with few comparable sales.

You may need to reduce the percentage that your are borrowing against the property value (LVR) to enable you to get approval.

Apply for a mortgage

Please call us on 1300 889 743 or enquire online and one of our mortgage brokers will help you to get your mortgage approved!

  • Elliot

    I live in a small town in Mount Gambier, SA. I applied for a home loan last month but was declined due to lack of comparable sales in the market. Is there any other way round this to get a mortgage?

  • Hi Elliot,

    Yes, lenders can often reject applications because of this but the good news is that there are some lenders that can accept properties even with few comparable sales. However, you may need to reduce the LVR on your home loan to get approval. Please call us on 1300 889 743 to speak with one of our expert mortgage brokers who specialise in this.

  • Bella

    Getting a $370k loan at 95% LVR to buy a house to live in. I have full financials and everything and had got pre-approved no problem. Now that I found the property, my application has been declined. It’s a Cat 1 location but an industrial area. Also, valuation with no comparable sales was the main issue they said. Help!

  • Hey Bella, we can do an upfront valuation for your property. To offset the perceived risk, we can find other solutions such as getting a guarantor and reducing the LVR if need be. Please call 1300 889 743 to discuss all this.

  • diamond

    I understand that most banks find high density units in inner suburbs to be quite high risk. How much can I generally borrow if I would like to buy a unit here?

  • Hi diamond,
    Even if these are considered high risk by the lenders, you may be able to borrow up to 95% of the property value to buy one. If you can get the help of a guarantor then you may be able to borrow up to 100% of the property value with select lenders. Please check out the inner city units page if you would like to find out more about this:
    https://www.homeloanexperts.com.au/property-types/inner-city-units/

  • Burton

    The property I want to buy is in an okay location but it has access to groundwater only. How much can I borrow to buy it?

  • Hey Burton,

    If you want to buy a property with borewater or groundwater access only then you can generally borrow up to 80% of the property value. If it also has access to tank water or town water then this becomes 95%. Please check out this page for details:
    https://www.homeloanexperts.com.au/property-types/bore-water-property-loan/

  • Harley

    I’m glad I checked this page out as well as the location guide. I want to buy my dad’s house and I found out that it’s in a cat 2 location so that’s good. Will I need a deposit for a home loan for this?

  • Hi Harley,
    You don’t need a deposit for a favourable purchase but do note that in some cases, you may need to prove that you have at least 5% in genuine savings. If you’re borrowing 90% of the property value though, you won’t need to prove genuine savings. Better yet, if your parents sold the property to you at 80% of the property value, you can not only avoid genuine savings but LMI as well.

  • Gordon

    We have $45,000 deposit and we want to use it to help buy a 85 hectare property in Bridgetown. We were told this was a category 4 location and difficult to finance by a lender we enquired with. My wife and I earn $150,000 collectively and we can prove our income so that and affordability should not be an issue. Would be good if we can also get 5 years interest only on this. Please help because our last lender couldn’t.

  • We’ll need a bit more information from your side to properly understand your personal situation and loan needs, after which we’ll run this scenario by some of the lenders that are most likely to be able to help. Please call our office and discuss things directly with an expert large land and property finance specialist.