Can someone please give me a general ‘rule of thumb’ for small properties.
My mortgage broker has told me to stay away from anything under 50m2. I have heard of banks lending on smaller properties though.
I have seen some nice bedsitter apartments in various areas that have high yields, however, some are a ridiculous 23m2.
Will any banks lend with a high LVR (95% or so) on these types of properties?
Simon.
Hi Simon
I can only speak for a major Bank.
50m2 is usually the min required for a unit/apartment. This is to exclude the balcony.
The next issue is the mortgage insurance. There are only two in Australia. GE & PMI. Anything under 50m2 G.E. won’t touch.You will find that there are a lot of Student accomodation units available, but getting a bank to lend for them is quite hard due to the specialised nature of the units and the small demographic that attract the tenant.
Hope this helps
DavidWhere there is a will there is a way!
You can get finance for anything. Rates and amount is the variable!
David is right that LMI will be difficult or impossible on most anything under 50sqm. But their will be bank finance available to 70 or 80% depending on other factors.
This fact keeps the prices down and also the potential capital growth – this is why the yields are higher.
Cheer,
Simon Macks
Residential and Commercial Finance Broker[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Aside from the finance side of things, do you really think these would make a good investment? banks are wary of lending for good reason. These sorts of units are hard to sell, and this can limit the capital growth.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
David
I have to disagree with you.
“The next issue is the mortgage insurance. There are only two in Australia. GE & PMI. Anything under 50m2 G.E. won’t touch.”
From GE’s website
“For good quality properties located in desirable and high demand capital city metropolitan locations, the minimum living area is 40 sq M.”
For PMI
“PMI will only mortgage insure selected high density securities. Contact PMI if you have any questions.
The acceptable minimum size for units is 40 sqm.”
Cheers Richard
Ph: (07) 3720 1888
[email protected]
http://www.yourstatefinance.comIP funding and US property finance
our specialityRichard Taylor | Australia's leading private lender
There are also a few other mortgage insurers, however most don’t like things this small.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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