{"id":8125,"date":"2016-05-03T10:00:17","date_gmt":"2016-05-03T00:00:17","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=8125"},"modified":"2016-05-03T10:00:17","modified_gmt":"2016-05-03T00:00:17","slug":"how-a-bank-looks-at-your-property","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/how-a-bank-looks-at-your-property\/","title":{"rendered":"How a bank looks at your property"},"content":{"rendered":"

Wouldn\u2019t it be nice to know that when you plan to approach a lender, you will have an idea about how they will look at your potential \u00a0purchase?\u00a0 There are some properties that the banks will treat more favourably than others and Bryce Holdaway<\/strong> tells us which ones.
\nTranscript:<\/strong>
\nKevin:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 When it comes to buying an investment property, it\u2019s always handy to know how favorably the banks are going to look upon your investment.\u00a0 There are some properties that banks like, and others that they don\u2019t.\u00a0 Let\u2019s find out a little bit more about this.\u00a0 Bryce Holdaway, who is the director of Empower Wealth, and also the star of \u201cLocation, Location, Location Australia\u201d joins us.\u00a0 Good day, Bryce.\u00a0 Thanks for your time.
\nBryce:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Hi, Kev, how are you?
\nKevin:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Good, mate. Are there some properties that banks favor over others, Bryce?
\nBryce:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Yeah, I always think that it\u2019s always a good sign to ask the bank of they would be prepared to give you mortgage insurance on a particular property.\u00a0 That\u2019s often a very good way to measure a risk of a particular property.\u00a0 If you think about a standard residential property in a built-up area, the bank would be quite comfortable lending you 90 or 95 percent of the value, and therefore issue lenders\u2019 mortgage insurance.
\nHowever, some properties, they won\u2019t do that on.\u00a0 Things that come to mind are student accommodations; service departments where they find it a little bit more risky, and the pool of buyers that are willing to buy if they put a \u201cfor sale\u201d sign out the front.\u00a0 You don\u2019t have the same pool of buyers, so they would consider that a bit more risky.\u00a0 That\u2019s usually a good little tip to find out whether the bank would see it as a good investment or not.
\nKevin:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 That lenders\u2019 mortgage insurance; just explain how that works, Bryce.
\nBryce:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Basically, if you want to borrow \u2026 standard scenario is you borrow 80 percent and deposit 20 percent plus costs either through cash or maybe using other forms of security, i.e. the principal place of residence, to get the loan.\u00a0 In some cases, the bank will actually let you go higher; 90 and 95 percent.\u00a0 That\u2019s on properties that they consider an acceptable risk.
\nIf they won\u2019t lend you lenders\u2019 mortgage insurance, that\u2019s usually a good sign that they consider it a bit more risky in the marketplace.\u00a0 I see that as a sign for exercising some caution.
\nKevin:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 What you\u2019re suggesting is actually going to the bank and asking that question before you commit to the property?
\nBryce:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Yeah, talk to your bank or your investment-savvy mortgage broker.\u00a0 Ask them that question; which ones do they consider a fair credit risk, and which ones do they consider more risky than others?\u00a0 That can give you a good sign.
\nFor example, I spoke to someone this week and he asked me about a service department, and whether or not that\u2019s a good investment.\u00a0 I said, \u201cBefore I even judge on that, go and talk to your broker and ask them what sort of lending they will give you on that.\u00a0 That\u2019s usually a good starting point.\u201d
\nHe came back to me and he said, \u201cYou\u2019re right.\u00a0 They\u2019ll only lend me 65 percent on that.\u201d
\nKevin:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 I know the banks were very sensitive, some time ago, to properties; particularly units under 50 square meters.\u00a0 Has that tolerance improved a bit?
\nBryce:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 I think that\u2019s a really good point that you put out, Kevin.\u00a0 Sometimes, some banks will actually let you \u2026 it used to be, 50 square meters used to be the magic number.\u00a0 In some cases, if it\u2019s 40 or 45 square meters, you can sneak it through with some lenders.
\nThe key is, only some lenders will do that.\u00a0 For me, that still puts you at a bit of risk.\u00a0 When it comes time to sell it, and you put a \u201cfor sale\u201d sign at the front, you want the maximum number of buyers that you can get.\u00a0 If some of them have got lending restrictions and some of them don\u2019t, to me that\u2019s not giving yourself the best chance.\u00a0 Particularly, if you\u2019re going to send the value around, you want to make sure that they don\u2019t place any extra risk on it, and downplay the valuation that they put on the property.
\nKevin:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Always good advice.\u00a0 Bryce Holdaway, who is the star of \u201cLocation, Location, Location Australia, and also a direct of Empower Wealth.\u00a0 Bryce, always great talking to you.\u00a0 Thanks for your time.
\nBryce:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Likewise.\u00a0 Thanks, Kevin.\u00a0 Chat soon.<\/p>\n","protected":false},"excerpt":{"rendered":"

Wouldn\u2019t it be nice to know that when you plan to approach a lender, you will have an idea about how they will look at your potential \u00a0purchase?\u00a0 There are some properties that the banks will treat more favourably than others and Bryce Holdaway tells…<\/p>\n","protected":false},"author":176692471,"featured_media":8126,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[32,34,36],"tags":[101],"class_list":["post-8125","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-property-topic","category-finance-topic","category-property-investment-topic","tag-podcast"],"yoast_head":"\nHow a bank looks at your property - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/how-a-bank-looks-at-your-property\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How a bank looks at your property - 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