Dual-occupied, negative -gearing properties may be popular with investors, but they are not always popular with lenders. Some banks and lenders consider these loans higher risk, limiting how much you can borrow or denying your application altogether. However, with some lenders, a borrower may be able to secure a loan and can borrow the following amounts:
- 95% for first-time homebuyers
- 95% for investors
- 80% for low doc loans
- 100% for a construction loan. However, only select lenders may approve a construction loan.
Before an individual applies for a loan, they must understand what a dual-occupied, negative-gearing property is.
What is a negative-gearing property?
A negative-gearing property is where investors take a loss. In other words, the cost of maintenance, mortgage repayments and additional fees on the property is greater than available rental income. These properties are popular with investors because the loss can be counted on taxes. Once the property has increased in value, the property can be sold for a profit.
What are dual-occupied properties?
Dual-occupied properties are two separate dwellings on one piece of land owned by one titleholder. In most cases, one residence is owner-occupied, while the other is rented out. There are three main types of dual-occupied properties.
- Non-adjoining: non-adjoining houses are separate from each other. They don’t share any common walls, nor are they connected.
- Duplexes: duplexes are connected houses that share a wall. They can also be a single house that has been divided into separate homes by adding walls and entrances.
- Granny flats: granny flats are separate smaller homes located on the same property. They can also be an upstairs or downstairs unit located in the main house. Often, they are used as guest quarters or for older family members.
The demand for these properties is not always high, making it challenging to secure a loan. If your client is interested in investing in a negatively-geared, dual-occupied property, the brokers at Mortgage Street can help. We are a non-bank lender, allowing us to approve loans that traditional lenders may classify as high-risk.