We recently helped a young couple who wanted to buy a inner city townhouse. They had saved a 10% deposit and went to a BIG4 Bank for a loan and were declined because the home they wanted to purchase was in postcode 6005 (West Perth), an inner city suburb. Referred to us by the Real Estate Agent we helped them get a loan with a local Non Bank lender who did not have Post Code Restrictions. They even asked the vendor for a $20,000 price reduction which was accepted.
The most amazing aspect of this transaction is that the house they wanted to purchase was only 2 streets away from an postcode area that had no post code restrictions!
What are Postcode Restrictions and the location categories?
Each lender and LMI provider has a guide that assigns a category for each postcode in Australia. There are typically five categories:
- Metro Plus: Established properties in well sought after metropolitan locations. Very low risk.
- Category 1: Metro areas, capital cities in each state & major regional centres with a large population. Generally considered to be low risk.
- Category 2: Medium sized regional centres. Considered to be low to medium risk.
- Category 3: Smaller towns with fluctuating property markets. Considered to be medium to high risk.
- No Category / National Locations: All other postcodes that aren’t included in the above categories. Considered to be a very high risk.
- High Density: Inner city suburbs or areas with high rise residential buildings. High density units in these areas are considered to be very high risk.
A particular area or postcode may have different classifications for different lenders depending on their interpretation of the property market in that area.
Some lenders will also take historical data into account.
On the other hand, QBE LMI has more restrictions on some areas that have an unstable economy.
Is your location considered to be high risk?
Please call us on 1300 885 244 or fill in our online enquiry form because we may still be able to help by choosing a lender that doesn’t have postcode restrictions.