Mortgage broker South Perth

Apartment lending, and the rules nobody mentions until settlement

The density along Mill Point Road and around the Mends Street precinct means a large share of South Perth sales are apartments. Lenders treat high-density postcodes more cautiously than the rest of the market.

The most common surprise is minimum size. Many lenders will not lend against a unit under a certain internal living area, measured without the balcony or the car bay, and a compact studio can fall under it.

• Minimum internal living area, commonly measured excluding balcony and car bay
• Caps on how many loans one lender will write inside a single complex
• Reduced maximum lending ratios in some high-density postcodes
• Strata levies counted as an ongoing commitment against your borrowing power
• Serviceability assessed on the actual lease, not on optimistic rent estimates

None of that is a reason to avoid an apartment. It is a reason to have the lender chosen before you sign, rather than discovering the policy after the deposit has gone.

Older walk-ups and newer towers

South Perth has two generations of apartment. Low-rise brick walk-ups from the sixties and seventies sitting a street away from towers finished in the last decade.

The older stock is often larger inside than buyers expect, which helps with the size rules. What it brings instead is the strata question, because a building of that age eventually faces significant works.

The newer towers avoid that but bring off-the-plan and exposure issues. A lender that already holds many loans in a building will sometimes stop writing new ones there entirely.

• Read the strata minutes before you commit, particularly on older buildings
• Check whether a special levy has been raised or is being discussed
• Confirm the internal living area from the strata plan, not the advertisement
• For off-the-plan, plan for a valuation at settlement rather than at contract
• Keep a cash buffer for any gap between valuation and purchase price

The riverfront end, and large single loans

The houses along the foreshore and up towards the zoo are a different market again. Once a loan gets large, the number of lenders willing to write it shrinks quickly.

Above certain amounts most lenders reduce the proportion they will lend, want a second valuation, or refer the file to a senior credit team. Their thresholds are not the same as each other.

This is where a panel earns its keep. Placing a large file with a lender whose policy suits it is straightforward, while pushing it at a lender who is already at their comfort limit is not.

Self-employed income and trust or company structures come up frequently at this end of the market. Those files need the right lender rather than a longer explanation to the wrong one.