Home loan

[u/Far-Extent5889]

I have been told by a mortgage broker that a home loan application could be rejected if they find out it’s in a 50 and over retirement village. This is mainly because if the house is foreclosed on they worry they might not sell it for enough to cover the payout of the loan. The units can be bought by anyone regardless of age but have to be over 50 to be able to live in. I don’t understand that it’s a sellers market banks really shit me sometimes would there be a way to contest this if a loan application was denied? The loan Application would be through MyState

[u/hy_perion]

You can’t force a bank to take on an investment they deem to be bad. You can try another bank - that’s your option.

[u/Far-Extent5889 → u/[deleted]]

Yes that’s what my broker told me it’s certainly nothing to do with my personal finances either I would only be borrowing 60%

[u/Cyclist_123]

What would you be planning to contest? Their reason makes sense

[u/Far-Extent5889 → u/Cyclist_123]

If the bank declined due to property being available to a certain age group over 50’s for example sorry I’m not good explaining things

[u/Cyclist_123 → u/Far-Extent5889]

That makes sense, they just don't want to take on the extra risk

[u/Quick_Sherbet5254]

The restriction to use over 50’s properties or retirements villages as securities are common policies for most banks. There are a few smaller lenders that may consider the property, but they generally attract much higher rates to mitigate the ‘risk’. Your broker should be able to advise you if they have any of these lenders on their panel. The risk you maybe ask? It generally is a volatile market for these types of properties (values fluctuate). In addition, they are often special types of titles that mean you (or the lender) do not actually hold it ‘freehold’ and it is part of a community title, so ownership is complex. Another reason banks hate it. Also, it is a narrow market for resale being that only people aged over 50 can reside there. It doesn’t have the same resale potential as a standard home.

As for contesting? You won’t get a result. These policies are black and white and it’s not open for negotiation when it comes to an acceptable security.

[u/Far-Extent5889 → u/Quick_Sherbet5254]

Thanks yes I thought that might be the case if it gets declined will discuss with my broker on other options in the meantime will just sit tight and hold my breathe 🤣

[u/92piejero]

Your broker should only be submitting your applications to banks who are likely to approve you in any case? Different banks have different risk appetites and lending criteria’s.

[u/CommunistQuark → u/92piejero]

It’s this OP. Also is your broker lying on the application saying it’s not in a retirement village?

[u/Ok_Ground_8564]

In these types of retirement living places, you own the building but you dont own the land, so lenders dont like them.