Why Lenders Treat Regional Properties Differently

A beautiful regional home can be a brilliant buy and a lending headache at the same time. Acreage, hobby farms and waterfront estates simply aren't assessed like a suburban house.

Consider a $1.8M canal-front home in Cairns, bought expecting to borrow 80%. Many big banks flag properties outside the major cities as higher-risk and quietly cap lending at 70% of the value — turning up an unexpected $180,000 in extra deposit. A specialist regional lender that understands these estates can see the same property far more favourably and lend the full amount.

So the property isn't the problem — the lender's view of the area is. With regional and lifestyle buys, checking how it will be assessed before you sign is the difference between a smooth settlement and a last-minute scramble.

Jack's Port Douglas apartment earned around $75,000 a year on Airbnb, yet the bank assessed it on ordinary long-term rent and trimmed it to about $25,000 before auto-declining. A specialist holiday-let lender that counts up to 70% of real booking history — and understands short-stay zoning — cleared the hurdle.

Two extra costs sneak up here: you usually can't avoid lenders insurance on a specialised regional holiday property, and council rates and management fees quietly eat into the income the bank will count. Know the lenders who understand short-stay, and the zoning rules that spook the rest, before you commit.

Michelle's plan — releasing $200k from a $1.5M Sydney home with a $600k loan to fund an investment deposit — nearly went wrong when her bank tried to refinance the whole block and link both properties. A specialist broker instead set up a standalone equity-release loan against her home (up to 80% of value) and bought the investment through a different lender, keeping the two independent.

Two things to remember: you can only pull equity if your income still passes the bank's affordability test, and crossing the loans means that if you sell one property the bank can force the proceeds onto the other's debt rather than leaving you the cash. Keep the loans separate and the released cash in your own hands.