Under 50sqm

Recently found a great little studio apartment for sale, that was perfect, until i tryed to get financing.

Was not aware of how difficult it is to secure finance for properties under 50 sqm in size!!!

Why is it so difficult?

Anyone know of a finance product/bank (pref. I/O LOC) that caters for this size property??

What is it about these types of properties that banks dont like to touch???

cheers, Jacob.
 
There are a number of lenders that will take this type of security, some wont touch it at all, as you found out!

Other lenders will do it but at LVR of say 60%, 80%.

What kind of LVR are you after?
 
These little properties have limited general appeal so a resale in the case of default may prove difficult. Hence the lenders' caution in advancing loans on them.
Marg
 
St George used to have a good option down to 25 sqm. Howevre, this changed when they got taken over by Westpac.

CBA are probably the pick of the bunch now, they don't have a minimum for below 80%, and case by case for over 80% ( LMI dependent - but generally 50 sqm )
 
mmm, was hoping to have LVR over 80%, but considering 80% seems to be the magic number (an previously i thought i just blanket wasnt possible to secure finance), i might go back to a previous strategy where I am looking to reno a small studio quickly then sell (as I assume getting this revalued to access equity would be similiarly difficult).

So 80% will cut it, 60% wont.

Marg - I see what you are saying, but there are always exceptions. I am looking in the Kings Cross/Darlinghurst area, where a comparitively very high % of places are one bedders/studios, and this matches the market demand. One bedders of 35sq m are going for $350-$400K and getting 5-6% rental returns.

Might check out the CBA product :)
 
Chicken or the egg

The reason they have limited resale is becaue its hard to get decent finance, so they are hard to sell because its hard to get decent finance.

And around we go

ta
rolf
 
Barry i think you would be pushing it with NAB.

Heard yesterday they are about to introduce a new unit policy where they wont be really be accepting anything of the smaller or serviced variety irrespective of the lvr.
 
When I was looking a couple of years ago, westpac told me they would finance under 50sqm for postcode 2010, which is around the Darlinghurst area. Might be worth checking out if this is still the case. Whoever you were talking to may not realise there are exceptions to the rule.
 
A couple of years ago 100% loans were possible, and a lot of lenders lent on small apartments if they ahd a seperate bedroom. The credit market has changed a lot since then. NAB also wont look at <50sqms over 80%LVR.
 
Chicken or the egg

The reason they have limited resale is becaue its hard to get decent finance, so they are hard to sell because its hard to get decent finance.

rolf

Not always the case. As below

Marg - I see what you are saying, but there are always exceptions. I am looking in the Kings Cross/Darlinghurst area, where a comparitively very high % of places are one bedders/studios, and this matches the market demand. One bedders of 35sq m are going for $350-$400K and getting 5-6% rental returns.

Totally agree. I bought a 1 bedder (small) in April 2009 for $218K in Potts Point. Demand is quite high. The one directly below mine sold for $235 a month after I bought mine. I haven't looked for a few months but I would get min $270K I think.
 
These little properties have limited general appeal so a resale in the case of default may prove difficult. Hence the lenders' caution in advancing loans on them.
Marg

Although I'd have thought that other factors such as the size of the complex and whether it's specialised student accommodation would be more important, especially where there's a seperate bedroom.

In my view the saleability/scarcity of the following small units are chalk and cheese and if I was lender I'd have very different rules for each:

http://www.domain.com.au/Property/For-Sale/Apartment/VIC/Glen-Huntly/?adid=2008091156 (suburban 1br apartment in small block - approx 35 m2)

http://www.domain.com.au/Property/For-Sale/Apartment/VIC/Carlton/?adid=2007433908 (CBD student apartment in large block)
 
I think it will be an uphill battle with just about any lender above 80%. Technically it is possible, but there's a high likelyhood that the mortgage insurer will knock it back. 50sqm is definitnely a magic number for size.
 
Although I'd have thought that other factors such as the size of the complex and whether it's specialised student accommodation would be more important, especially where there's a seperate bedroom.

In my view the saleability/scarcity of the following small units are chalk and cheese and if I was lender I'd have very different rules for each:

http://www.domain.com.au/Property/For-Sale/Apartment/VIC/Glen-Huntly/?adid=2008091156 (suburban 1br apartment in small block - approx 35 m2)

http://www.domain.com.au/Property/For-Sale/Apartment/VIC/Carlton/?adid=2007433908 (CBD student apartment in large block)

Yes Definately!!! Blanket rules are our enemy :)
 
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