Properties banks don’t like

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Company title- Instead of a strata title, an apartment might be on a company title, which means a company owns the block and each apartment is considered a share. Investing in a company title property means you become a shareholder in the company and do not own the land directly. Banks deem these harder to sell because new buyers are more likely to be put off by not owning their own land

Heritage listed- Banks believe heritage listed property is a bad security, because rules prevent owners from altering the property to add value and therefore makes it harder to sell

Hotel/motel conversion- Sometimes a hotel will be bought, closed down and converted into individual units. Lenders view them as tough to sell because they maintain their hotel feel

Leasehold- Sometimes a property comes without a title and a borrower actually buys it on a long-term lease from the government. An example of this is Woolloomooloo Wharf in Sydney, where the properties are over water instead of land, so there is no title. Despite the fact that the government leases are usually close to 100 years, many borrowers still prefer a freehold arrangement

Rural zoning- Out of town properties, such as farmhouses in rural locations, attract a smaller pool of buyers than those in residential zones. Most lenders will also only go to around 60% LVR, because it is too hard to get mortgage insurance.

Top Suburbs : freshwater , dulwich hill , millner , lalor park , west rockhampton

  • Mim says on 22/01/2013 02:51:02 PM

    You also missed many other types of property that the banks don't favour as security: student accommodation, managed apartments, retirement village units and units under 50m2. Some of these are not able to be used as security at all, so you must either pay cash for them or use another security against a loan to buy it. This is based on the difficulty of reselling these, and the time it takes to sell as banks want their monies promptly in the event the loan goes bad.

  • Peter Shizas says on 22/01/2013 02:56:31 PM

    Also need to be careful of Unit groups especially if there are any bedsitter properties below 35 sqm within the group. Banks don't like to lend against these properties. A group of units that I bought which was heavily positive geared could only get a commercial lend despite there being far less risk for the bank as there were 11 separate units meaning 11 separate income streams.

  • Leah Marshall says on 22/01/2013 03:45:10 PM

    Investors and owner occupiers should also seek advice prior to purchasing a small unit, student accommodation or a serviced apartment as lenders can restrict lending for these assets too.
    Remember, not all lenders are the same and that is why using a broker can be invaluable. Don’t despair if you are sold on your purchase because one lender's reject can be another's appetite!

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