What’s in a number? How a postcode can affect your mortgage.

The mortgage landscape is forever changing and some financial institutions have recently made changes to differentiate mortgages according to postcode. Financial institutions are under pressure from APRA (Australian Prudential Regulation Authority) to keep their mortgage business balanced – not too many investment loans and not lending too much money into areas where fluctuating prices may leave a buyer owing more to the bank that what they can get if the property is sold.

To this end some financial institutions are now restricting the amount you can borrow against some properties. Usually you can borrow about 90-93% of the home’s value and pay extra Lenders Mortgage Insurance (LMI) or 80% of the value and avoid the extra cost of LMI. Some financial institutions are now capping the amount you can borrow to buy a home in targeted postcodes to 70% of the value of the home. This means you will need to come up with a deposit of at least 35% of the purchase price (including purchase costs) to secure a mortgage.

At this stage it does not affect metropolitan Adelaide but if you are looking to purchase a home, give me a call and I can check that you are able to borrow the amount of money you need.

Mark Scherer 0403 577 287 

Posted in: Home loans

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