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Banks’ restrict finance on tiny apartments

Purchasing a small inner-city apartment or bedsit could be “almost impossible” according to Scott BJ, principal of Scott Banister-Jones, because most major banks and lenders won’t lend against properties smaller than a certain size.

Mr Banister-Jones said that there was a “huge” demand for bedsit properties from first home buyers and investors because they were cheap and close to everything.

“But unless you’ve got cash it’s almost impossible to buy because the banks won’t lend to you,” he said.

Home Loan Experts mortgage broker, Hank Hong, said that most banks are happy to lend on places bigger than 50 sq metres, but on anything from 25-40 sq metres lending would be restricted to about 60-80 per cent and “good luck” on anything less than 25 sq metres.

“That’s mostly student accommodation and the banks don’t want to touch it because the resale is too hard,” Mr Hong said.

But Mr Hong said that there was strong demand for small apartments, particularly from investors, as they were close to all of the main amenities, had high rental yields, and were mostly positively geared properties.

Source:
http://www.heraldsun.com.au/realestate/investing/too-small-too-buy/story-fndcursx-1226585601970