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Why residential loans trump commercial loans.
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 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 then 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 loan.
Why are the banks so conservative?
The lenders are conservative when assessing loans secured by multiple dwellings in one location because these properties are a much higher risk to the bank compared to a normal house.
Consider how easy it would be to sell one house as opposed to a block of units?
If you have multiple properties spread out over different locations this represents a much lower risk to the bank and can be assessed normally.
Tips for buying a block of units.
- Look at why you are buying a block in one line. If you’re seeking a high rental return often you can get the same result by buying a house with a granny flat. You’ll have less risk and easier access to finance.
- Avoid towns with less than 5,000 people as this reduction in the size of the market can cause the block to be incredibly difficult to sell. You may be waiting years to find a buyer.
- The quality of tenant is very important, particularly with larger blocks of say 10 units. If all are tenanted then the building can quickly end up becoming run down and can have significant unreported maintenance issues. Buying in a good location and choosing a good property manager is critical to the success of your investment.
- If you plan to convert your block to be strata title then make sure you speak to council about the requirements before buying the block. Many blocks need work to meet fire regulations or other rules which make this kind of project unfeasible.
How our services can help you…
Complete our free assessment form or call us.
We assess your situation.
We look at al the options from our panel of lenders.
We will find you the most suitable deals.
We’ve lent more than $1 billion Australia-wide.
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in the 2015 and 2016 Better Business Awards.
Recently, we were approved for a loan all due to the hard work Preeti put into helping us secure our first family home. Preeti went above and beyond normal working hours and weekends to help us along the process.
– Vanessa, Elwood, Melbourne