Which lenders will lend 85% LVR on 'rural' zoned property?


We have found our 'dream' property, totally by chance, we weren't really looking - but several things have just kind of fallen on to place this last week culminating with us viewing a property we saw advertised a year ago and thinking WOW, that's where we want to spend the next 30 years, coming back to market.

As things turn out, our current property has done well and would sell easily, and the property we have now been to see a few times is now within grasp.

Here's the problem.

It's zoned 'Rural Conservation Zone 2'. Until we contacted our current mortgage company I had no idea this was potentially an issue, but then they told me that they could only lend up to 65% LVR.

To pull this off, we need in the region of 85% LVR.

The annoying part is that, other than the actual council zoning, it satisfies all other requirements for 'Rural Residential' as stipulated by say NAB for example. i.e. it's under 20 acres, (it's only 6), it has a existing residence which is connected to electricity and 'water pursuant to the area' and is within 10k of a town with a population of over 20,000. The only condition it falls down on is the actual council zoning, which isn't enough to get it over the line.

The property is surrounded by similar properties, I can't imagine all of whom have required a minimum of 30% deposit?

I'd rather that our offer is rejected, or it gets sold to somebody else than us not be able to get it over the line due to finance isues - especially when we can easily service the repayments and there's still a decent 15%+ equity in it (and the most annoying part being that effectively there's no real reason it shouldn't be zoned rural-residential).

To cut to the chase, does anyone know of any lenders that will lend in the region of 85% LVR on 'rural' zoned properties? Or, at the very least, look at applications on a case-by-case merit rather than pigeon holing a 6 acre home in the same basket as a 100 acre farm?

At 85% you're dealing with LMI providers as well as banks, and they tend to be much more formulaic. If you can possibly get 5% by other means (personal loans, even credit card advances as a very short term measure) you might have more luck. The bank might have more ability to exercise some discretion.

Oh - when we bought in a semi-rural area, our broker told us straight out to go through Commonwealth as they were the most flexible of the big four when it came to regional areas.

It's probable that we'll be a tad under 80% as I have used very conservative figures for the sale of our place, but I don't mind paying the 8 or 9K in LMI if it gets it over the line.

The problem I'm having is the fact it's zoned as Rural Conservation Zone 2, rather than the easy Rural Residential - the banks I've tried so far wont lend more than 70% regardless of LMI. It's a 30% deposit, or no thanks.

I'll try Commonwealth Bank in the morning, cheers.
Another potential issue is valuations in remote areas, even if you can find a lender to do the LVR you need, it is sometimes dificult getting a valuation that reflects the purchase price. The valuer/assessor can have trouble finding recent comparable sales if the market is thinly traded....
That is a worry, and a problem we fell foul of with our first house here when the bank undervalued it.

This is the whole annoying thing about the zoning. It's not remote at all, far from it. There's plenty of similat sized blocks all around the area and it's a 4 minute car ride from densly populated areas. The whole area immediatly around this place is what I would call rurl-residential, or residnetial acreage but not accroding to the council.

Anyhow, some good news - Combank was open still, (big points from me already), the lady was vry knowlegable and as soon as I said it was 6 acres she said there would be ni problem in lending up 90% regardless of zoning.

Great rates too, with the wealth package it comes in at 6.41% variable 100% offset and we're thinking of fixing 50% for 5 years which is running at 7.89% through the wealth package.

Loks like we can go put our offer in.

Next hurdle is how to negotiate a deal when we still have a house to sell and the finaice approval will depend upon sale of our place. Guess we'll find out how to negotiate that soon enough. I'd rather we loose the place on the offer terms than on stingy bank criteria.

CBA is neither PC sensitive, nor overly fussy on the zoning if its not too large, but you alearyd knew that from ur enquiry with them

CBA is neither PC sensitive, nor overly fussy on the zoning if its not too large, but you alearyd knew that from ur enquiry with them


Nice to hear it again though Rolf. After being told so many times tonight by other lenders that it's no good, I still have in the back of my mind that when it comes to the crunch and we put the application in they'll turn around and say "you have got 30% deposit havn't you?".
Well TOny and Emma

to reduce that perceived risk a little u could use a broker to chase the app though for u .

An experienced broker ( and I know there are lots in Melb that ppst here) can make sure that its properly put together with the max chance of approval.

One thing u have to remember ( and I suspect thats maybe where ur fear is grounded) most bankies are employees with an "eating salary". They dont always need to make ur loan work as much as a broker does.

Cheers Rolf, I have been working woth a broker from the forum and I am waiting for his recomendations. Mean time, as we wanted to put an offer in, I called round ,yself and ended up at the above. I may drop the broker a line and go through him anyway if it would make sense to do so.