Not every property fits neatly within standard lending criteria.
A home may look suitable to a buyer, but its construction, location, title, condition, or intended use can affect how a lender assesses it. This does not necessarily mean lending is unavailable. It may simply mean the application needs more information, a different approach, or consideration by a lender with suitable criteria.
Understanding potential issues before making an offer can help buyers prepare and reduce the risk of unexpected delays.
What can make a property less straightforward?
Lenders generally want confidence that a property provides suitable security for the loan and could be sold if necessary.
Some properties may therefore receive closer attention. Examples can include apartments with a small floor area, leasehold properties, homes with unconsented work, unusual construction materials, lifestyle blocks, relocatable homes, properties in remote locations, and buildings used for both residential and commercial purposes.
The lender’s view may depend on the specific property, the size of the deposit, the buyer’s financial position, and its own lending policy.
The title and legal structure can matter
The way a property is owned can also affect lending.
Unit titles, cross-leases, company-share arrangements, and leasehold titles each have different features. A lender may want to review documents relating to the title, body corporate, lease, or shared areas before confirming finance.
Legal advice can help buyers understand the ownership structure, obligations, and any restrictions attached to the property.
Condition and insurance may be important
A valuation, building report, or evidence of insurance may be required, particularly where a property has visible damage, deferred maintenance, weather-tightness concerns, or construction that is harder to insure.
Being able to obtain acceptable house insurance is commonly an important lending condition. Buyers may benefit from checking insurability early rather than assuming cover will be available after settlement.
A larger deposit may help, but it is not the only factor
A bigger deposit can sometimes give a lender more flexibility because it reduces the amount being borrowed relative to the property’s value.
However, a larger deposit does not automatically resolve every concern. The lender still needs to be comfortable with the property, the borrower’s ability to meet repayments, and the overall application.
Do the checks before committing
Before making an unconditional offer, buyers can consider discussing the property with their mortgage adviser, solicitor, and other relevant professionals.
A mortgage adviser can help identify information a lender may request, explain possible finance conditions, and approach lenders whose criteria may be appropriate for the situation.
A property that falls outside standard criteria may still be financeable, but early preparation can make the process clearer and help buyers make a more informed decision.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.