Mortgage broker Northbridge

Mixed-use titles, and why lenders read them differently

A large amount of Northbridge stock sits in schemes that mix residential lots with retail, office or hospitality lots. From the street it looks like an apartment building with shops at the bottom, and to a lender it is something else entirely.

Where commercial floor space forms part of the security, many lenders reduce the proportion they will advance, and some decline residential lending on it altogether. Others take the file but classify the property as a commercial security, which changes the rate, the loan term and the basis the valuer works on.

That reclassification is the part people are not expecting. A loan you assumed would run for thirty years on a home loan rate can come back as a shorter commercial facility priced on its own terms, and it is not always obvious from the contract which way a property will fall.

• How much of the building is given over to commercial floor space
• Whether the strata scheme includes retail or hospitality lots alongside the units
• Whether the lot you are buying carries any commercial use on the title itself
• The loan term on offer, which is commonly shorter once a security is treated as commercial
• The valuation basis, which can shift from comparable sales to what the space earns

Living above a venue, and letting to short stays and students

Northbridge is Perth's entertainment quarter, and a good deal of its residential stock sits directly above premises that trade late. That is the appeal for many buyers and it is also the first thing a lender's credit policy reacts to.

Where a licensed venue is immediately below or adjoining, some lenders cap how much they will lend, and a few will not take the security at all. The reasoning is resale rather than anything about you, since a valuer has to consider who the next buyer will be.

1. 1

   Give us the address first, not the loan amount

   What sits under and beside the unit changes the lender list more than your deposit does. Two minutes on the strata plan saves a declined application.

2. 2

   Expect a narrower panel rather than a dead end

   Plenty of lenders are comfortable with inner-city mixed-use. The work is finding them rather than arguing with the one you already bank with.

3. 3

   Have the strata documents ready early

   Levies count as a commitment against your borrowing power, and the scheme's makeup tells the lender what it is actually lending against.

4. 4

   Plan for a larger deposit than you would need elsewhere

   Lending ratios are commonly reduced on units above licensed premises. Knowing the number early is better than discovering it at valuation.

The tenancy side matters just as much. Northbridge carries a strong short-stay and student letting component, and most lenders will not treat that income the way they treat a signed twelve-month residential lease.

Where income arrives as nightly bookings, many lenders either discount it heavily or disregard it and use a valuer's assessment of ordinary market rent instead. That can pull your borrowing capacity well below what the property genuinely earns, so it is worth testing across lenders before you commit.

What Northbridge clients come to us for

The work here divides into two streams that rarely meet. Owner-occupiers and investors buying apartments or one of the remaining cottages, and operators who need finance against a hospitality or retail premises.

The second stream is a genuine commercial loan rather than a home loan with a different label. Shorter terms, a lower proportion of the value advanced, and a valuation that weighs the lease, the fitout and the trade rather than the sales up the street.

The cottages are their own small category. What survives in the residential pockets is generally modest, old and tightly held, and a valuer leans on the land and on the handful of comparable sales nearby rather than on what has been spent inside.

• Home loans on Northbridge apartments, placed with lenders comfortable with mixed-use schemes
• Refinancing where a lender has reclassified a mixed-use security or capped the lending ratio
• Investment lending on units let short-stay or to students, assessed realistically
• Commercial loans for hospitality and retail premises, including owner-occupied venues
• Development finance where an inner-city site supports a mixed-use build

Our office is on Cambridge Street in West Leederville, a short run out along the freeway, so a face-to-face appointment is easy enough if you want one. Every outcome above is subject to lender approval and your own circumstances, but choosing the right lender for a Northbridge title is usually what decides whether the file runs at all.