Units under 50m2 - lenders

Hi All,

I've got my eye on an older studio/1 bedder. It was under offer but came back on. I suspect trouble getting finance as the unit is 39m2 + carspace

Question is does anyone know of lenders that would lend for this type of unit?

Thanks in advance!

 

Try ANZ

 

I believe some banks will add the size of the car space to the over all size of the unit. At least that is what my broker told me.

 

CBA - they have no minimum size restriction at 80% LVR but must be at least 40sqm if its in LMI territory. It must be also self contained.

There are other lenders that will do it at 80% like Suncorp and Gateway.

ANZ is max 60% LVR - they will do 80% if its 40sqm.

Also double check the sqm as it is often different to what is advertised.

 

Do you really want to buy a 39sqm property? You might get what you think is a bargain, but when you try to sell, your buyers may have issues with finance too. Think about it carefully.

 

CBA at 80%.

@Gockie is correct. You will have a limited market come time to sell.

 

I have a couple of small studio units (borrowed 80% with CBA). I like them for their yield. I feel that if I hold them long term then the higher yield will make up for any difficulties I have if I ever decide to sell them. I've been reading for the last 10 years that there's a shift to a higher proportion of single person households (don't know if that's actually true, but it does seem to be talked about quite a bit). If this continues, I wonder if there's a chance that lenders will lower their borrowing restrictions for this type of property, leading to an increase in the value of these units.

 

What is the net yield ,

 

Agree....my issue with 1br is you still have all the tings that go bust in a 2-3br eg stove/plumbing/toilet etc etc BUT less bedrooms to amortise the cost over in rent etc.

what is the net yield before borrowings? and where are they located?

 

50 m2 is heaps big enough, I think changing acceptance of smaller spaces will facilitate good gains on small flats in Australia in the future. My 3 homes in the last 20 years have all been under 40 m2, all had great views though. My last purchase was 39 m2, rental returns are better compared to larger apartments.

 

You are correct, resale is a concern. Would prefer a larger 1 bedroom but there are currently none on the market in my target area.

My hubby and I had an offer accepted for an older house, good price and we are currently in the 10 day cooling off hopefully all goes through smoothly. Once that property is settled I might keep my eye on potential 1 bedders popping up.

Thanks for everyone's help.

 

NAB have the best policy in this space.

As long as the total unit size - internal, external( balcony) , storage + parking exceeds 50M2, they will lend to 90% I/O .... subject to postcode of course...

pre APRA they would do them to 95%

 

So if I have the following unit :

Internal - 52sqm
External balcony - 7sqm
Parking space and storage - 26sqm

Total - 85sqm

I shouldn't have a problem right? Lender of choice is Liberty.

 

The size shouldn't be an issue - but I cannot say if you would have a problem or not.

 

52M2 internal living area would be acceptable to all lenders. So the security size itself doesn't appear to be an issue. Whether Liberty will offer you finance will be subject to their broader credit requirements such as your credit history, employment history, the security postcode , valuation, borrowing capacity etc....

Generally speaking, it's only where the internal living area is less than 50M2 that the choice of lenders starts to narrow. At 45M2 or less, it narrows even further. At 40M2 or less, it narrows to just a few.