Acceptable Security with the ‘Big 4’

Something that doesn’t come to the forefront of people’s minds when purchasing a property, is whether a bank will accept that property as security.

Generally speaking you shouldn’t have many issues with this, however there are certain criteria that need to be met for the banks to accept a property as security. These range from the size of a unit, to the type of title the property is listed on.

We’ve put together the below table which shows the ‘Big 4’ banks criteria for the security:

NAB:

• If serviced apartment, must:
  • • Legally permitted for permanent residential use
    • Can be removed from management agreement at any time with maximum 4 months’ notice
• If leasehold:
  • • Maximum LVR 80% for standard, 70% for investment inner city
    • Lease term to extend 10 years past loan term
    • May require legal review
• No bridge access:
  • • LVR restrictions apply – however can’t be confirmed until submitted and valuation is reviewed by credit
    • Client may need to pay for valuation due to large fee due to access restrictions
    • Bank will rely on valuer comments and once valuation is received property may be deemed unacceptable security

CBA:

• If leasehold:
  • • Maximum LVR 80% (unless other restrictions on postcode)
    • Postcode to be acceptable under leasehold listing
    • Term of lease subject to approval
• No bridge access:
  • • LVR restrictions apply – can’t be in LMI territory
    • Client may need to pay for valuation due to large fee due to access restrictions

ANZ:

• If student accommodation must not:
  • • Have an operating lease or management agreement
    • Must not restrict the re-sale of the property
    • Maximum 60% LVR
• No bridge access:
  • • LVR restrictions apply – however can’t be confirmed until submitted and reviewed by credit
    • Client may need to pay for valuation due to large fee due to access restrictions

Westpac:

• Student accommodation or serviced apartments may be approved by high risk credit, but need to meet the below (LVR restrictions will apply):
  • • 1 conventional bedroom
    • Full kitchen and bathroom facilities
    • Internal living space of 40SQM
    • Permanent occupancy permitted by local government
    • If under lease, lease is able to be terminated with 90 days’ notice
    • Rental does not form part of a pooled rental income scheme
    • COS must allow for bank to act on its security without limitation

*Please note most lenders will also have general post code restrictions, value restrictions, and will assess the application in it’s entirety. Banks will assess whether a security is deemed acceptable based off the valuation and valuers comments. Bank restrictions can regularly change, these are what is applicable in June 2018.