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There are 2 other factors that will affect your ability to get a mortgage – the type of property title and the zoning of the land.

Residential Property Titles

For residential property there is a range of property titles but the most common are torrens, strata, or company title. In summary:

• A torrens title generally applies when there is house and/or land.
• A strata title will apply to units
• A company title is more rare and generally applies to units
  
  

There are generally no issues relating to title in obtaining finance for either strata or torrens title properties. However company titles are far more complex.

Company titles were used for a period of time as an easier and cheaper method than strata title for completing a block of units. In this case the units are held in a company structure and you own your ‘share’. However other shareholders have rights in terms of what you can do with your unit and potentially even your ability to sell. It is very important to consult with your solicitor before purchasing a property with company title. Due to these additional difficulties some institutions will not lend on company title at all whilst others will on a more conservative basis (generally 75% or less depending on the location).

Accordingly it is very important to check what sort of title any prospective property is under.

Zoning

When you buy a property it is also important you are aware of its zoning. Whether it is zoned residential, commercial, or industrial will determine whether you need a residential, commercial, or industrial loan – which may have very different interest rates.

Occasionally you will come across properties that are zoned ‘Mixed use’. Generally these properties are a blend of commercial and residential eg a shop with a residence upstairs. Residential loans require a property to be only zoned residential. A property zoned mixed use will generally require a commercial loan and will not be accepted as security for a residential loan. It will be up to the discretion of each individual lender depending on the particular characteristics of the property.

Within each zoning category there are also additional sub categories that will determine what you can do with your property. For example whether you can only build a free standing home or whether you can build units, if you can build units whether there are any height restrictions. If you are planning on making any alterations to a property always ensure you check with the local council as planning restrictions may vary from one council to the next.