The type, location, condition and value of the property can all affect the lender's assessment and how much you may be able to borrow.
What types of property can be used as security?
Many standard residential properties can be used as security, including:
- houses
- townhouses and villas
- units and apartments
- vacant residential land
- house-and-land packages
- new and off-the-plan properties.
Different property types may be subject to different lending criteria. For example, when assessing an apartment, lenders may consider factors such as its size, location, development, and type of title
What properties may not be accepted?
Some properties may be less suitable as security or may introduce additional lending requirements. These can include properties with significant structural defects, unusual construction, unauthorised building works, environmental risks, commercial or mixed-use components, specialised accommodation, large rural or acreage properties, or properties affected by title, zoning or access restrictions.
This doesn't necessarily mean you can't buy these types of properties. However, if you're considering a property with these types of features, check with your lender before making an offer.
Why does location matter?
The location of a property can affect how suitable it is as security. Lenders may consider the local property market, comparable sales, access, infrastructure, zoning and environmental risks.
A property in an established residential area with similar properties nearby may be easier to assess than one in a remote or unusual location. Different lending criteria or Loan to Value Ratio limits may apply depending on the location.
How does property condition affect security?
The condition of a property can affect its value and suitability as security. Lenders may consider issues such as structural damage, significant water or pest damage, major roof problems, incomplete construction or unapproved renovations.
A building and pest inspection can help you understand the property's condition and identify potential costs before you buy.
How does property value affect how much you can borrow?
A lender will generally arrange a property valuation, which may differ from the purchase price. The property's assessed value is used when determining the Loan to Value Ratio (LVR) and can affect how much you may be able to borrow.
If the valuation is lower than the purchase price, you may need to contribute more towards the purchase.
Learn more: What is LVR and how does it affect your home loan?
What other costs should you consider?
Your deposit isn't the only cost of buying a home. Depending on your circumstances, you may also need to allow for:
- stamp duty or transfer duty
- conveyancing or legal costs
- building and pest inspections
- loan and valuation fees
- Lenders Mortgage Insurance (LMI), if applicable
- government registration fees
- insurance
- owner’s corporation or strata fees
- council rates and other property costs
- moving, maintenance and repair costs.
Some costs are paid upfront, while others are ongoing.
Learn more: What is Lenders Mortgage Insurance (LMI)?
Before you make an offer
Before committing to a property, consider its location, condition, value and ongoing costs, as well as whether it is likely to meet your lender's security requirements.
If the property is unusual or you're unsure about its suitability, speak with your lender before making an offer.
Ready to take the next step?
Reach out to our BankVic Home Loan Mentors to help you find out what type of home loan is right for you.
We’re here to help
If you have any questions about buying a property, visit Home Loans | BankVic , call 13 63 73 or book an appointment with a BankVic Home Loan Mentor.
