Will you Accept Property Located on Island as Security for Loan?
While most lenders do not like approving island properties as securities for a mortgage, as a non-bank lender, we may be willing to, in some cases, even if you are applying for a low doc loan. Depending on the location of your island property, you may be eligible to borrow up to 80%.
What is mortgage security?
Mortgage security is a way banks guarantee that you will repay your loan. Essentially, your asset, in this case, island property, is used as collateral in case you cannot repay your debt. Your loan amount is secured against your property that is worth more than the loan. In case of default, your lender can take possession of your property and then resell it to recoup their loss. A professional valuer will assess the value of your property, and this value will be used to determine your loan size and the loan-to-value ratio. In addition, this valuation will act as a preliminary guide for your lender when it comes to deciding an approximate resale value.
What locations are preferred?
Properties located on islands that are not connected to the mainland by a bridge are considered high-risk loans and are not preferred as mortgage security. This is because these locations are not in high demand, which can make resale difficult. Tasmania, Russell Island, Lamb Island or Macleay island are preferred and can be used as security when borrowing 80%. We may consider other properties on an individual basis.
At Mortgage House, we understand that securing a home loan can be difficult. If you have questions about whether or not your island property can be used as security for a mortgage, our expert brokers can help assess your situation.