While standard residential dwellings and apartments are more commonly sought after, unique homes have been steadily making their way into the market.
If you’ve found a unique property and need to finance the purchse, can you get approved for a loan?
Will the banks lend to me?
As unique homes are a higher risk property type, the lending criteria differs from that of other security types.
Lenders place a large emphasis on saleability, so if the house is marketable and would appeal to a variety of buyers, you may still get approval for a loan.
What is the approval criteria for a unique home?
Generally, the house must have:
- A kitchen, and
- A bathroom, and
- Access to an all weather road, and
- Power connected or available (power lines, not purely solar power)
Lenders will assess each application on a case by case basis. Where other features of your application are stronger, you may get approval.
As a general rule you may be able to borrow up to 80% of the property value. If the property has very limited appeal or cannot be compared to any properties in the area then the lender may reduce the loan amount even further to manage their risk.
How can we help?
We can order a valuation up front before you submit a full application to any banks! We can then discuss the valuation and the details of the property with a variety of banks, in order to confirm which lenders will accept it.
Speak to us by calling 1300 889 743 or enquire online and we can help you to finance the purchase of your unique home.
What do the banks think?
Lenders are always cautious of lending to people who are using unusual property types as security for a loan. This is because unique homes are of limited appeal and do not suit the needs of the wider market.
Most couples and larger families prefer houses and apartments that have regular features.
The banks know that unique homes take longer to sell and are significantly harder to value as there is nothing similar to compare the home to.
Some banks also have location restrictions, so if the home is in a particular postcode, it may be difficult to get approval!
But not all lenders are the same! Some are more flexible than others and will make exceptions to general policy.
How much can I borrow?
You will typically be entitled to borrow up to 80% LVR. Although, if the property is readily saleable and your finances, income and employment history are strong, you may be entitled to borrow more.
Where the loan is under 80% LVR you will not be required to pay Lenders Mortgage Insurance (LMI).
If you have the support of a guarantor, such as your parents, the bank can use their property as security to guarantee the loan, so you can borrow up to 100% LVR.
To find out whether you will qualify for a loan above 80% of the purchase price, call us on 1300 889 743 or enquire online.
What are unique homes?
Unlike ordinary homes with regular features, unique homes have qualities that separate them from conventional homes.
Some may be smaller in size, have unusual spaces, different or unique design aspects or are constructed with atypical building materials.
Many are older style homes with original characteristics that need slight improvements and others are dwellings that previously served another purpose and have now been converted into residential homes.
Types of unique homes
Examples include houses that are built around trees, former commercial properties that have been converted and houses that have spaces or large areas which were originally built to serve a custom purpose.
Often the people that purchase these homes have to make improvements and minor renovations to them, in order to make them liveable. However, not all unique homes require these alterations.
Some have all the features necessary to move straight in, but are simply of limited market appeal. If you have found a unique home that you are interested in please call us on 1300 889 743 or enquire online and we can tell you whether the banks will accept your security type.
Where can I find a unique home?
Because unique homes are not as common, they are more difficult to find. It is useful to look in newspapers and magazines for unique homes.
There are also many popular websites such as www.realestate.com.au and www.domain.com.au which may list these properties.
Many of these homes also sell at auction so it may be preferable to speak to a real estate agent, who can advise you when new listings are made available.
Unique and luxury homes are built across Australia. Modern and contemporary homes are found in urban areas, and older more unique country homes can be found in rural areas.
Use the above resources to find your own unique gem!
Unique home designs
Building a brand new home with a unique design is becoming very popular with Australian home owners.
Many are looking for builders who offer unique, modern and contemporary building designs that will set them apart from regular homes.
A variety of building companies offer floor plans for unique homes so that owners can build their dream house.
However, as they are luxury homes, they can often be quite costly! If you are thinking of building this type of home, it is best to do some thorough research beforehand and work out a budget and a plan.
If you are not looking for a building plan, it is possible to consult a builder to have your house custom designed, with a floor plan to suit your individual taste. This way you can include the elements that you want your house to have.
With so many options available, designing your own unique home has never been easier.
Looking for a loan to purchase a unique luxury home? Call us today on 1300 889 743 or enquire online and we can help you get finance for up to 95% LVR!
What you need to know
Before purchasing a unique home, make sure that you find out all the important information and order a building and pest inspection.
This way you will know that the foundations of the home are strong and there are no structural issues or termite infestations.
It will also be necessary to order a valuation. This way you will know if you are paying market value for your home.
By taking these steps, you will avoid encountering difficulties later on.
Heritage-list property case study
Paul and Anna recently got a bridging loan to buy an inner city unit and to sell their home in Sydney.
Their bank valued their home at $2.2 million 3 months ago but when it came time to sell their property, it sold for $1.4 million. That’s $800,000 less than the bank valuation!
What went wrong?
The problem is that the home is unique in so many ways that trying to determine an accurate price is difficult:
- The property is heritage-listed.
- The land size is over 2,000m² but the house itself only has two bedrooms.
- It also has horse stables out the back that have been converted into a 1 bedroom studio.
- Properties over $2 million or luxury properties can fluctuate in value much more than standard residential dwellings.
- At the time the couple wanted to sell, the Sydney real estate had weakened and it is luxury property valuations that are hit with the most conservative valuations.
Unfortunately for Paul and Anna, the property market can change pretty quickly and this can affect the bank’s decision in how much they’re willing to lend, particularly for unique homes.
Luckily for the couple, they purchased the property for $500,000 around 10 years ago and they were to pay out their bridging loan.
They were obviously disappointed about selling their property for $800,000 less than what they were expecting but it could have been worse!
Apply for a home loan today
We are the experts in all unusual property types and help individuals across Australia obtain finance to purchase the property of their dreams.
Whether it’s a conventional 4 bedroom, double brick house in the suburbs, or a house with unusual features, we can help you get approval!
Call us on 1300 889 743 or enquire online and one of our mortgage brokers will get in touch with you to discuss your situation.