Buying a block of land or house off the plan is set to become more difficult as Australia’s biggest bank makes changes to how it will finance people looking to do so.
The Australian Financial Review this week revealed that the Commonwealth Bank provided a confidential presentation to mortgage brokers in which the bank said it will not provide finance to people looking to buy in new developments until all necessary work to make lots ready for development has been completed.
According to the AFR, the confidential presentation told brokers that rather than relying on a development plan to assess whether it would commit to a loan or not, the bank will now wait until an external valuer physically inspects the lot.
"We believe a more accurate measurement in getting a valuation on unregistered land at an appropriate time should instead be based on the valuer having access to the estate and being able to physically identify the allotment," the bank’s presentation read.
The bank is likely to formally introduce the changes in the coming weeks and in a statement to the AFR defended the move as a means of practicing responsible lending habits.
"In line with our responsible lending commitments, we constantly review and monitor our lending standards to ensure we are maintaining our prudent lending standards and meeting our customers' financial needs," the statement read.
The move by the Commonwealth Bank comes in the week after property and mortgage experts warned that it was a risky time to buy off the plan developments
given the current financial environment.
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