Rural Lifestyle Homes
Many people have the dream of owning a few acres to give their kids room to play and explore, have a horse or two, or to just enjoy the privacy of a larger block. The trouble is that depending on your lender a block larger than 10 or 20 acres can be hard to finance, and these will often be treated as rural in nature.
Why? Because bank lending and policy decisions are made in the CBD by people that think Penrith is as far west as the country goes (well, OK, they may have heard of Perth and the big rock in the middle, but that’s about it).
There are some common rules around these blocks to have the finance on them treated as a home loan:
- All weather access - Sealed is preferred, but a well formed all weather gravel road may be acceptable.
- Electricity connected - In most cases forget off the grid, you will need access to electricity.
- Water supply - Most lenders will get worried about relying on rain water and will really want town water. Trickle feed is acceptable.
- Phone service - This used to be a big killer, but it is becoming accepted that less people are having land lines.
- Sewerage - Septic or other approved systems are OK. Just for the record, long drops are not considered “approved”, OK.
- Location - Generally within 5 to 10 kilometres of a town.
- Price - The lenders will be hesitant about a block (or house) where your sale is near to the highest recorded because it reduces their resale market.
- Market - Evidence of a ready resale market. Recent property sales within the prior six months are usually used by valuers for comparison purposes and as these types of properties often don’t sell quickly comparisons are often limited.
- Size - This is where it is tricky. If the property is not income producing up to 100 acres is generally all right – once it gets bigger the lenders will be less relaxed about some of the points above and start to baulk at the block you are looking at.
Depending on the deal one or more of these points may be negotiable.
While we have made it sound hard we have lenders on our panel that are more comfortable than others in this space. Why are they more comfortable? Because they are smaller regionally based lenders that understand our lifestyles, and they want a similar block themselves.