What does lifestyle lending purposes mean?
Lifestyle lending purposes is the term we use when a client wishes to use a property for security or purchase a property that is different from the traditional security that the banks normally use. We also use the term unusual property types.
This page is designed to let you know that there are loans available for most purposes, and it is the restrictions of the lenders that needs to be determined in order to understand where to apply for this type of finance.
On this page we will give you a basic overview of different types of lending purposes in relation to different types of securities.
As example: You want to buy a studio apartment in the city, and it is 30 m². The lender is going to place restrictions on how much they will lend you.
The reason for this, is that this type of security, as with most unusual securities, would normally take longer to sell than a different type of security such as a unit or a house.
This is not to say that you can’t obtain finance for such a property, just that the criteria will be different from a normal home loan. Your mortgage consultant here at Illawarra Mortgage Brokers, will be able to guide you through the process of seeking the correct lender along with the best loan for this kind of purchase.
What are the types of property can I purchase?
There are many types of properties that Australians like to buy apart from just their home that they will live in. We will provide a short list below outlining some of the types of properties that can be financed. Please keep in mind that each property will need to be assessed by your lender to determine if it is a suitable security of their lending policies.
There are obviously other types of properties that can also be considered by the lenders. Please call your mortgage consultant at Illawarra Mortgage Brokers with any questions that you may have regarding the purchase of this type of property.
Some unusual property types are:
- Studio Apartments Loan
- Weekend retreat Loan
- inner-city unit Loan
- Hobby Farm Loan
- Units on one title Loan
Please read on to find out more about each unusual property type that we have listed here.
Studio apartment home loans explained
Is difficult to get a loan for a studio apartment?
Buying a studio apartment is not as difficult as you may think. This type of property is gaining popularity as a holiday retreat, an investment property or just to have somewhere for your children to stay in a city where they may be studying or working.
Why are the lenders conservative about lending for studio apartments?
The lenders are traditionally very conservative when the property size is under 40 m² (size is based on the apartment size – excluding any balconies or car spaces). When you are purchasing a studio apartment over 40 m², the lending policy is a little bit more relaxed and you will have access to several more lenders for this type of lending.
If I have other property, would it be easier to buy a studio apartment?
Yes, if you have other property and are using both properties as security, then this generally means that there will be no issue with studio apartment size. Again this depends on the lender’s policies and restrictions.
- Studio apartments are becoming quite popular at this time, due to the fact that housing property is so expensive in Australia.
- They are also popular because they are generally located in densely populated areas such as inner-city areas and due to their size are a lot less expensive than say a two-bedroom unit in in the inner-city.
- You may find in the future that the lenders will relax their policies in regards to this type of property due to the fact that they are becoming much more popular.
Can I buy a studio apartment?
It won’t cost you anything to talk to an expert mortgage broker about purchasing a studio apartment. As discussed, there are many lenders who will consider this type of property.
To find out what your options are in regards to purchasing a studio apartment and to take the guesswork out of which lenders will look at an application for you, please call your mortgage consultant here at Illawarra Mortgage Brokers.
Weekender Loans explained
What is a Weekender?
Also known as a weekend retreat, a Weekender is a property that you would buy to escape the city on weekends or during holidays in most cases. It is nice to be able to finish work at the end of the week, hop in the car with the family and head off to your weekender to recharge your batteries for the working week to follow. Nice!
- We have clients who have purchased a weekend retreat, and we find that it is a lifestyle that they would not give up, now that they are able to enjoy the benefits of being able to get away whenever they choose to.
- A weekend retreat could be a small apartment in the city or it could be a small parcel of vacant land where you could build a small cabin and enjoy the great outdoors.
- It could even be a small beachside property. It is basically a property that you would purchase to visit on a very regular basis as opposed to a property that you would purchase as an investment to rent out.
Is it difficult to obtain a loan to purchase a Weekender?
In our experience, is generally not too difficult to find a lender with the right policy, will finance a weekend retreat, once we understand what your needs are. It is difficult to answer this question without knowing your circumstances. Some lenders do not lend for this type of security and we will need to look at your circumstances before we could recommend which lender has the right lending policies for this purpose. Please call your mortgage consultant here at Illawarra Mortgage Brokers.
Inner-city unit loan
What do I need to know about buying an inner-city unit?
We have lenders on our panel who will consider lending for this type of property. Inner-city units are becoming very popular due to the high price of houses in our major cities.
- The inner-city units are easier to sell these days than what they were a decade ago, due to the fact that they are not only cheaper than houses close to the city, but they are also in close proximity to the city and all the services that the city has to offer.
- They are also popular for people who work in the city, that are not willing to commute an hour and a half every day, to get to their place of work.
Should I apply for an inner-city unit loan?
As with every loan that we do, we will need to work out if your situation will allow you to qualify for this type of loan and which lenders are likely to approve finance for you.
To find out what options are available in regards to purchasing an inner city unit and to take the guesswork out of which lenders will look at an application for you, please call your mortgage consultant here at Illawarra Mortgage Brokers.
Hobby Farm Finance
What is Hobby Farm finance?
Hobby farm finance is for the purchase of small acreage that is not income producing. In other words if the farm has 20 acres of corn planted, then the lender is going to assume that the farm is being used as a business. This means that you would need to apply for farm finance, which is a more difficult proposition for you.
- It is up to the bank to determine whether or not it is a hobby farm or an income producing farm.
- This is not to say that you can’t have a farm with crops or animals on the property, but the bank will need to be satisfied that if there are crops and animals on the property, that they are there for your own personal use.
Will the banks let me buy a hobby farm?
- We have several lenders that we have used for this type of finance. As long as you satisfy the criteria of the lender that you approach then there should be no problem in purchasing a hobby farm.
- Our job as your mortgage broker is to know which lenders to approach for this type of finance. It is common knowledge that the banks are conservative when it comes to lending for land of any type.
- Even residential blocks of land are more difficult to finance than say, an established house. So as you can imagine, with larger blocks the criteria from the lenders is going to be more difficult.
- Knowing which lenders to approach is half the battle and once we have a clear understanding of your financial situation and your needs we will be able to assist you in applying for a loan to purchase a hobby farm.
What else do I need to know about purchasing a hobby farm?
- There will be size restrictions with some lenders, for example, land size up to 50 ha (just under 25 acres) is not too difficult. Anything above this size will start to reduce the amount of lenders we can use to consider your application.
- As discussed at the start of this document, this type of security would normally take longer to sell than a different type of security such as a unit or a house.
This means that the lenders will tend to be more conservative when lending for this type of property.
Should I apply for a hobby farm loan?
If you are sure that this is a type of property that you would like to purchase, then by all means, please call a mortgage consultant here at Illawarra Mortgage Brokers.
As usual, without knowing your circumstances we can’t say if this type of property would be approved for you. Call us to find out.
- Units on one title Loan
Can I get a loan for more than one unit on one title?
As long as you qualify, then yes
Depending on your circumstances, we can approach many lenders who will finance this type of security.
- There will be restrictions that you need to be aware of, and those restrictions will differ between the lenders.
- Most of these types of loans will be restricted at 80% of the property value, but depending on what your circumstances are, we may be able to achieve a higher lend for you.
What do I need to know about loans for units on one title?
There are a few things that we would like to point out that you should know.
- Some lenders may want to treat your loan for this type of security as a commercial loan. This means that you will be paying a higher rate, and that they will lend you less against the value of the property than a residential loan. We will always try to obtain the best loan available for your circumstances.
- Most lenders do not like to lend above 80% of the property value. Again, depending on your situation, we may be able to lend more than 80%.
- As with most unusual securities, this type of security would normally take longer to sell than a different type of security such as a unit or a house. In the event that you could not manage your loan, then the lender may be forced to sell the property and it may take a while or they may be forced to sell it at a lower amount that what you paid. This means that the lenders will tend to be more conservative when lending for this type of property.
- You may have no option but to apply for a commercial loan facility. As mentioned before it is possible to do this with a residential loan provided that the lender agrees to it. If the bank does not agree, then you may be left with no other avenue except funding this with a commercial facility. Depending on your circumstances, this may be okay as commercial loan rates at the time of writing this article, are fairly competitive. (February 2015)
Should I apply for a units on one title loan?
As usual, without knowing your circumstances we can’t say if this type of property would be approved for you. To find out what options are available in regards to purchasing units, and to take the guesswork out of which lenders will look at an application for you, please call your mortgage consultant here at Illawarra Mortgage Brokers.
How can you apply?
These are your simple steps to apply for a loan.
- Contact us– to speak to a mortgage broker, please call (02) 4257 5626 (Southern area) or (02) 4283 5626 (northern area) or fill in our contact us online enquiry form.
- You will speak with a broker who will take into account your needs by discussing not only your requirements, but also any concerns you have, and offer you some possible strategies and ideas that you may not have thought about.
- Once we know what you require, we will draft and email you a proposal – this will usually consist of a few options that are easy to understand.
- Once you have had a chance to look at what options are available, you can contact your broker or the broker will call you, to discuss the proposal.
- You can then decide if you wish to proceed or you may just want to discuss more options.
Decided to go ahead? Great.
- Your broker will now take all of your information by completing a standard questionnaire with you and confirming details from your prior discussion – this is a 15 minute process for an average couple or you might prefer a face-to-face appointment.
- You will then be asked to complete a document checklist for your chosen lender and in the meantime, our office will prepare an application on behalf of the chosen lender.
- All that needs to be done now is for you to sign the application and give your checklist documents to your broker and your loan will be lodged
- We will then follow up on the progress of the loan and keep you informed as it progresses right up until the loan is completed.
It is that simple.
Put us to the test. You will be glad that you did.
Thank you for visiting our site and taking the time to learn what your mortgage broker does.
Posted 20 February 2015
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Mortgage finance brokers for residential and investment loans in Wollongong and the Illawarra region.