All Topics / Finance / <50M2 Rule on Lending
I came across this last week, I have a studio apartment that is 100% 0wned and giving returns of around 8 – 9% pa yet the Westpac bank will not allow me to use the equity as a deposit on another property because it is less than 50 M2 .
Is this common and what is the basis of this.
ASB Alpine
Hi ASB,
The point you raise is why holiday lets (and the like) are problematic as investments. Sure they may have ‘good’ cashflow but as you have found out some lenders see them as a risky proposition and will either lower the maximum LVR or restrict release of equity.
You may find that a broker can assit and be abel to find you a more ‘friendly’ lender.
The scenario you allude to does occur and I am aware of situations when lenders initally lent at 80% and then reviewed their risk rating on the property and reduced the LVR allowed.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958Many lenders adopt this attitude however as long as the property is >25 Sq M then you should be able to obtain upto 80% LVR at standard interest rates.
The inclusion of a lift is also important as to whether lenders wish to accept the security. Most prefer without.
A client from the forum contacted me last week buying a 1 bed unit in Sydney which was 34 Sq M and we have organised 80% lend for him.
This was a PPOR but a IP as long as it is not part of a letting pool should be acceptable security.
Richard Taylor
Residential & Commercial Finance Broker
Ph: 07 3720 1888
[email protected]Richard Taylor | Australia's leading private lender
It depends how small it is!
Many banks will look at sizes greater than 40sq m. St george is particularly good wth small apartments.
Terryw
Discover Home Loans
Parramatta
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I use NAB and they are ok with >40m2
Cheers
Jeff Aquilina
Need a holiday? http://www.coralsearesort.com email me [email protected] 20% DISCOUNT for PropertyInvesting.com members
Also keep in mind that often the size limitations do NOT include balcony/car parking areas – only “living” areas.
Regars,
LG
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