Postcode Exposure and Limitations
Neighborhoods change once every two to three decades. A generation moves in and raises their children. Once the children move away, parents often move away too. They downsize and sell their homes to the next generation. Some neighborhoods don’t attract the next generation. So, they experience depression.
When investors notice that the area has an opportunity, they step in and help revive it. While neighborhoods change, they also go through postcode exposure and limitations.
A total of six postcode location categories exist, Metro Plus, Category 1, Category 2, Category 3, No Category, and High Density.
Each category determines the lender’s LVR. In some cases, the lender will not finance the home purchase. For example, No Category and High Density represent the highest risk. Therefore, lenders may skip trying to finance them.
Metro Plus represents a desirable area to live in with little to no risk for the lender. Category 1 poses little risk and it increases steadily toward Category 3.
Homebuyers who need to obtain a 90% or 100% LVR for a Category 2 or Category 3 property can if they present collateral or acquire a guarantor.
Loan specialists from Mortgage House can answer your questions and present some options. If one mortgage option doesn’t work, they can find alternatives in most cases. Try our mortgage calculator with no strings attached.
Postcode Exposure and Limitations Conclusion
Lenders take a look at postcode exposure and limitations when assessing home loan applications. They assess risk depending on the market’s movements by postal code throughout Australia. To understand your property’s postcode exposure, contact the loan specialists at Mortgage House.