The Gold Coast property market has its own little quirks and doesn’t always play nicely with the lending rules that major banks apply everywhere else in the country. The bit where they restrict lending to certain postcodes, the minimum size requirements for apartments, the rules around short-term rentals, and the way they assess body corporate fees all play a game of musical chairs in this market and often it’s not until after an offer has been accepted that buyers catch on. To avoid getting caught out, it’s pretty essential that you get your head around the lending landscape before you start committing to anything.
A Market With Numbers Worth Understanding
South East Queensland has been one of the biggest property hotspots in Australia in recent years and the Gold Coast apartment market has been absolutely flying. As of 2024, we’re looking at second place in the country, just behind Sydney, when it comes to median apartment prices. That price hike has brought a whole bunch of investors, downsizers and interstate buyers flocking in, and you can bet the construction industry has been working overtime to keep up. Between 2018 and the midpoint of 2024, the number of apartment projects under construction on the Gold Coast more than doubled in terms of both the number of projects and the total number of apartments being built, driving demand for mortgage broker Gold Coast services.
But here’s the catch, and even though construction is going full steam ahead, the reality is that build costs have been going up, some builders have gone bust, and finding reliable tradies has become a real challenge. Which means that a lot of developments are way behind schedule. And if you’re buying off the plan, that gap between when your finance gets approved and when you actually settle on the property can leave you in a world of trouble, especially if your pre-approval conditions have expired or interest rates have shifted while you’re waiting.
Why Standard Bank Applications Fall Short Here?
There are a few key features of the Gold Coast property market that are destined to cause friction with the mainstream lending rules, and it’s really worth knowing about these before you start looking at properties:
- Major banks often don’t want to lend to certain postcodes in Surfers Paradise, Broadbeach and Southport, no matter how solid the borrower is.
- A lot of high-rise apartments on the Gold Coast have floorspace that’s below the minimum size threshold that major banks will lend on, even if the borrower’s finances are in order.
- Even if you’re earning a real bomb from short-term rentals, most banks still won’t count that as income when they’re working out whether or not you can afford to service a loan, and they’re not even bothering to look at your bookings on AirBnB or whatever.
- Body corporate fees in Gold Coast apartments can be a real killer, and they often get factored into your living expenses when the bank is working out your borrowing capacity, and no, they’re generally not as cheap as they are elsewhere in Australia.
If you rock up to a property auction with a pre-approval from your home state bank, only to find out that the specific property you’ve offered on doesn’t meet their lending criteria, you’re going to have a major problem, and one that a lender-specific assessment before you even start looking could have avoided entirely.
Loan Structure Decisions That Compound Over Time
There are several ways of holding Gold Coast investment properties, and each of the decisions that is made at the purchasing stage will inevitably have compounding effects that develop over time. Interest-only repayments preserve cash flow during the early years but reduce equity, whereas principal and interest payments build equity quickly but decrease the monthly cash flow, which will be important to those using rental income to cover all expenses throughout the vacancy periods.
The interaction of the existing home loan and the new investment loan at the same lender often leads to the development of serviceability constraints that can be avoided by putting the investment loan at a different bank. It is also important to understand the way the tax is applied to the interest on the investment loan because the rules of deduction differ depending on the manner and the structure of funds’ allocation.
Pre-Approval on the Gold Coast: Know What You Actually Have
The properties here are sold very quickly, and the competition from interstate buyers and well-prepared local ones is significant. At least pre-approval is considered a minimum standard of preparedness for a buyer. Nevertheless, the term includes the spectrum of various levels of preparedness. Full credit-assessed pre-approval, which means that the buyer’s income, liabilities, and credit history were formally assessed by a lender according to its criteria, is more powerful than a generated conditional pre-approval that gives a figure but does not assess anything based on the documents.
It is vital because the generated pre-approval can be withdrawn when the application is submitted as the documents might reveal some facts that were not included in the initial estimation. The task of a broker in this situation is to make an exhaustive analysis of the buyer’s position before submitting an application and to find out the lenders that give the best offer to the particular buyer’s profile in order to receive the strongest possible pre-approval.
Three Questions That Quickly Reveal a Broker’s Actual Experience
Not every broker necessarily has practical experience of working in the Gold Coast’s market conditions. Three questions allow finding out if the broker is truly prepared to work here. Does the broker have any experience of placing loans on Gold Coast high-density apartments, and what about the lenders that actually provide such services? Is the broker able to specify the method of calculating the borrower’s position in terms of the body corporate fees of the chosen property? And finally, how does the broker manage the deadlines for the settlements of off-the-plan or construction purchases?
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