In particular we focus on getting the loan structure right the first time, choosing which lenders to use in the right order (yes this is important) and finally getting our clients the best deal possible.
Loans in postcode restricted areas
Many lenders have lending restriction based on the location of a property. This is commonly referred to as postcode restrictions. Some lenders have a list of areas they won’t lend in at all or areas where they will only lend at 80% or 70% loan to value ratio (or less) for example. It goes without saying this can be a problem if the property you are looking to finance falls in one these areas.
Another layer of complexity comes if you are seeking to borrow over 80% LVR and mortgage insurance is involved. The insurers have their own location restrictions which can be more onerous than lenders themselves. There are often simple ways around these potential problems and it usually comes down to knowing which lenders are comfortable doing what where. This is where Mortgage Experts can help.
Common issues borrowers face relating to postcode restrictions which we usually find a solution for.
- Inner city apartments
Properties right in the heart of major cities are mostly high rise apartment buildings and can be subject to periods of over –supply. For this reason many lenders are reluctant to lend in these areas. Or if they will lend it is often with some LVR restrictions. Not all lenders have inner city postcode restrictions.
- Rural areas/ smaller towns
Properties located in and around towns with less than say a few thousand residents can be problematic to finance. There are often two issues with properties located in these areas. One is the postcode restriction issue which is a blanket approach by the lenders in determining if the location is a bit too remote or small for them to consider mortgage worthy. The second potential issues in these areas can be a lack of recent comparable sales. Which can make determining fair market value a problem for lenders.
- Mining towns and single industry towns
Many mining towns and their surrounding areas are in remote locations so lending restriction based on the postcode of the towns may apply. Adding to this are their volatile property markets and high rental yields which combined makes lenders nervous about over extending on property located in these areas. In trying to avoid possible over speculation many lenders have now also placed additional restrictions on the amount of rental income that can be used in their borrowing capacity calculations for properties located in these single industry towns or indeed for any property with a higher than usual rental yield. Of course this conservatism in regards to mining towns and single industry towns may be misplaced especially if a blanket approach by lenders is adopted. Areas such as Gladstone for example have been one of the best performing areas to invest in over the last decade. Often we can find a way to finance properties located in areas with postcode restrictions.
- Boat only access and island properties
We have in the past come across lenders not being too keen to finance boat only access properties such as those located on the Hawkesbury River near Sydney. There are lenders who will lend against these properties. Scotland Island is another boat only access area near Sydney where we can arrange finance.