Over the
last few years, lenders have restricted their criteria when it comes to the
type of property they'll accept as security against a loan, as they need to
ensure they can offload the asset quickly if you default on your mortgage in
order to cover their costs.
Bearing
this in mind, some types of real estate are more favourably looked at than
others by the banks and they'll assess the location, size, and features of a
property before accepting it as security.
For
instance, a regional town or small one-bedroom apartment in a new
high-rise complex will be less likely to pass the test than an inner suburban
detached family home or spacious apartment.
Get it right
Before you
commit to any property, you should check with lenders whether they will accept
the asset as security or not and if there will be any higher costs for doing
so.
For
instance, the purchase of an off-the-plan CBD apartment will not be funded by
most banks at a loan-to-value ratio of more than 70% and you'll be approved for
less if you buy in a country town.
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Jason Gwerder
Thursday, 1 September 2022
