Home Loan For Waterfront Properties

Waterfront properties are some of Australia’s most sought-after homes. Great views, prime locations, and a relaxed, resort-style lifestyle make them incredibly appealing. But buying one is not always the same as buying a standard apartment or house.

In many cases, waterfront units are not sold as freehold because they sit on or over water rather than on traditional land. Instead, they are often sold as leasehold properties.

These properties are often cheaper than similar freehold apartments, while others can be worth millions of dollars.

What Is A Waterfront Leasehold Property?

Waterfront leasehold properties are land or dock areas located directly on a body of water such as a lake or ocean.

Buying a waterfront property isn’t the same as buying a property on land.

These types of properties are usually located on water because many of them are properties that have been renovated from old wharfs.

Why Are Waterfront Leasehold Properties Different From Standard Apartments?

Most waterfront properties are old industrial wharfs that have been renovated and turned to residential units and offices. These properties often have marinas attached.

Waterfront properties are located on water, not on land. This is the reason why these properties are usually only available on leasehold.

Waterfront leasehold properties can be cheaper than a standard apartment on freehold, however, they can also be quite expensive depending on their location.

Keep in mind that the foreshore maritime structure, or marina, may not be included in the lease. Make sure that you check the existing leases or licences covering any maritime structures.

Consider seeking professional advice before you decide to buy waterfront properties.

What Are The Benefits Of Buying A Waterfront Leasehold Property?

Waterfront properties are some of the best properties in Australia!

You can usually find waterfront properties in awesome locations. These properties offer a great lifestyle for those looking lavish for a holiday-style lifestyle.

These properties are relatively cheaper to buy as a leasehold compared to buying a similar property that’s freehold. However, some properties can be very expensive and you’ll need to be in a significantly strong financial situation in order to apply.

How Does The Home Loan Process Work For Waterfront Leasehold Properties?

Generally, buying a property as a leasehold is a cheaper option than buying a similar freehold property.

However, it’s important to understand that you don’t own the land. The land is owned by another person or company.

The homeowner signs a contract and pays regular rent to the landowner.

The amount you can borrow usually depends on the block you’re buying in and the area of the unit you’re looking to buy.

With the right lender, not only can you get a great home loan deal but you can also qualify for certain interest rate discounts.

How Much Can You Borrow For A Waterfront Leasehold Property?

Generally, you can borrow up to 80% LVR (Loan to Value Ratio) for a minimum living area of 40m2. You’ll also require a full valuation of the property before you can get approval for a mortgage.

The amount you can borrow can vary depending on the block the property is located in.

Please contact the agent directly to get more information on the property before you decide to apply for a home loan.

Alternatively, our experienced mortgage brokers can take care of all the hassle for you.

It may actually be possible to borrow up to 100% of the property value with a guarantor loan.

Call us on 1300 889 743 or complete our free online assessment form to speak with one of them today.

Can Waterfront Leasehold Properties Be Used For Investment Or Commercial Purposes?

You can generally use the property in whatever way you want, as long as it’s legal.

This means that you can use the property for:

• Residential purpose.
• Investment purpose.
• Commercial purpose such as a commercial office suites that can be financed on 15-year terms.

Which Waterfront Leasehold Properties Do Australian Banks Accept?

Westpac has a list of acceptable properties, including waterfront properties on lease, that has likely been unchanged since 2013.

Some of the acceptable waterfront properties in the list include:

• King Street Wharf, Sydney: Department of Maritime Services. You can borrow a maximum of 80% LVR for units that are over 40m2 in size. Only residential apartments are available.
• Hickson Road or Pottinger St, Walsh Bay, Sydney: Waterways Authority. You can borrow up to 80% of the property value for units over 40m2. Only residential apartments are acceptable.
• Cowper Road, Woolloomooloo: Department of Maritime Services. You can borrow up to 90% for units that are less than 50m2. normal credit criteria apply.

Keep in mind that these properties can be bought as a leasehold and they require a full valuation as part of the application process.

What Should You Check Before Buying A Waterfront Leasehold Property?

ALthough buying a leasehold property is a much cheaper option, there are certain risks that you need to consider.

For example, rent can become rather expensive, almost without warning. If the rent is high then you’ll have a tougher time to sell the property.

Aside from the risks, you can qualify for interest rate discounts and more if you apply with the right lender. However, you’ll need to meet certain requirements.

Can Waterfront Property Buyers Get Interest Rate Discounts?

You can qualify for certain interest rate discounts if you meet the required criteria set by lenders.

High income professions such as doctors and mining engineers can qualify for significant discounts and fee waivers.

You can call us on 1300 889 743 or complete our free online assessment form to find out if you qualify for any discounts.

What Are The Main Risks With Waterfront Leaseholds?

Buying waterfront properties can be complicated. For example, there are cases when people overlook certain fees and end up paying more than what they had expected.

Other problems that you may face are:

• The lease may not be renewed.
• The value of the property may drop over time as the lease term approaches its end. However, if the lease term is extended, the value of the property will go up again.
• You can lose the property to the government if they decide to use the location to build something else. For example, if the government decides to build a casino on your property then you’ll probably lose out.
• You may make the mistake of overlooking certain fees and charges before you buy the property. This can make it difficult for you to afford the loan repayments and will affect your borrowing power.

Tips on buying waterfront properties

To get the best out of a mortgage for waterfront properties, you need to:

• Look out for strata fees: Waterfront properties are unique properties and are often redeveloped old wharfs. It’s also located in the ocean so maintenance can be very expensive.
• Discuss with existing owners: Speak with other owners in the block to find out if there are any ongoing problems in the block, or why it’s a great place to live.
• Check if there’s a lease for the foreshore maritime structures or moorings: Many blocks have certain foreshore structures, such as buoy moorings, which may or may not be included in the lease or may be a separate purchase. Some units even come with their own mooring. Check with the agent or do your own research before you decide to buy.

Buying A Waterfront Leasehold Property?

Before you sign a contract or pay a deposit, speak with one of our mortgage brokers to find out whether your waterfront leasehold property is acceptable to the right lender.

Call us on 1300 889 743 or complete our free online assessment form, and one of our mortgage brokers will help you work out your next step.