What are considered acceptable securities for a property loan?

Security is not a prime lending justification but is a risk mitigant as well as supporting the loan facility.


Lenders do not lend with the aim of having to acquire and then sell a security.

Lenders use various LVR’s against acceptable securities and lending margins are often 80% for acceptable residential security.

Typically, borrowers can borrow in excess of 80% LVR by taking out LMI (Lenders Mortgage Insurance).

Different lenders have different options when it comes to LMI and some will set a higher interest rate if the lender funds the LMI for the borrower.

Lo-Doc lenders will often set their LVR at 60%, for instance.

LMI will be required typically for loans in excess of 60% LVR and non-conforming lenders may not require LMI, or they may build the LMI cost into the interest rate or sometimes into the loan application fee.

Applicants whose total assets are not greater than their total liabilities and applicants who are not yet 18 are not considered.

Standard Security can include:

·     Vacant residential land

·     House and land packages (construction)

·     Display homes

·     Residential homes

·     Residential strata units

·     Residential strata/freehold townhouses or duplexes

·     Studio apartments (minimum size 50 sq.m)

·     Rural residential  housing

·     Rural land for the purpose of residential occupation

Non-standard residential security can include:

·     Services apartments

·     Development land

·     Property development

·     Commercial property


Need a property loan?

Contact us @ propertyloans@realrenta.com


Jason Gwerder
Friday, 28 February 2020

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