What postcode location categories do banks use?

Lenders apply stricter lending policies in locations they deem as high risk, to limit their own risk.

This can affect the maximum available LVR and the maximum amount that you can borrow.

Some lenders also take historical data into account, for instance, unstable economic factors and so on.

Each lender and LMI provider has a guide that assigns a category for each postcode.

Typically, there are 5 categories:

• Metro plus

These are established properties in popular metro areas- very low risk

• Category 1

Metro areas, capital cities & major regional centres with large populations- very low risk

• Category 2

Medium sized regional centres- considered to be low to medium risk 

 • Category 3

Smaller towns with fluctuating real estate markets- considered to be medium to high risk

•No category/National Locations

 All postcodes that don’t fit into the above categories-considered to be very high risk

• High density Inner city suburbs/areas with high rise residential buildings/high density units

 Considered to be very high risk.

If you are considering your next investment loan but not sure about your eligibility,

contact us at propertyloans@realrenta.com for a no obligation discussion with our finance partner.

Marlene Liontis
Saturday, 6 October 2018

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