In short: Some properties are perfectly legal, insurable and tenantable, and still attract a reduced maximum loan-to-value ratio or an outright decline. Serviced apartments, student and boarding accommodation, company and stratum title, retirement units, display home leasebacks, warehouse conversions and multiple dwellings on one title all fall in this group. Expect 50% to 70% LVR where accepted at all.
The common thread is not quality. It is resale. A lender asks one question: if this loan defaults, how quickly and at what price can the property be sold to an ordinary buyer with an ordinary loan? Every type below narrows that buyer pool, and the LVR falls to match.
Two related restrictions have their own pages: floor area and building exposure in apartment size and lender restrictions, and suburb caps in postcode and location lender policy.
The reference table
Maximum LVRs below are typical market ranges, not any single lender's policy, and all change without notice.
| Property type | Why lenders are cautious | Typical maximum LVR | Check before you bid |
|---|---|---|---|
| Studio under about 50 sqm internal | Narrow buyer pool, high supply of near-identical stock | 60% to 80%, some decline | Internal area on the strata plan, excluding balcony |
| Serviced apartment | Value depends on an operator agreement, not market rent | 50% to 70%, many decline | Management agreement term and exit rights |
| Student accommodation | Permit restricts occupancy to students; investors only on resale | 50% to 60%, many decline | Whether the permit allows general residential use |
| Boarding or rooming house | Commercial-style operation, registration obligations | Commercial terms, often 60% to 65% | Registration status and loan type |
| Over-55s or retirement unit | Restricted buyer pool, deferred management fees, sometimes a licence not a title | 50% to 70%, several decline | Form of tenure and exit fee structure |
| Display home with leaseback | Rent is above market and temporary; vacant possession delayed | 70% to 80% | Leaseback term, rent reversion, make-good |
| Company title | You own shares, not a lot; no ordinary title to mortgage | 50% to 70%, most decline | Whether the company consents to a mortgage |
| Stratum title | Title exists but common areas sit in a service company | 60% to 80%, some decline | Service company agreement, unpaid liabilities |
| Multiple dwellings on one title | Cannot be sold separately; valued as one asset | 65% to 80% | Whether council permits the number of dwellings |
| Warehouse or office conversion | Zoning, mixed use, unusual layouts | 70% to 80% | Zoning, permitted use, whether a residence is lawful |
| Heritage listed | Restricted alterations, higher maintenance, narrower demand | 70% to 90% | Listing level and what it prevents |
| Very large block, over about 2 ha | Assessed as rural or lifestyle, not residential | 60% to 80% | Land size, zoning, water access |
| NRAS or defence housing stock | Rent set by scheme or contract, long management agreement | 60% to 80%, some decline | Remaining agreement term and rent reversion |
The apartment group
Studios and very small apartments
Covered in apartment size and lender restrictions. In short: an internal area under roughly 50 square metres, excluding balcony, car space and storage, triggers a reduced LVR at many lenders and a decline at some. Get the strata plan.
Serviced apartments
An apartment leased to a hotel or serviced-apartment operator. The income is contractual rather than market rent, the operator controls the fit-out and the letting, and if the operator fails the apartment may not be lawfully usable as a home. Lenders treat these as specialised security: a large deposit, a conservative valuation, and often the income excluded from servicing entirely. Files sometimes move to commercial property lending.
Student accommodation
Purpose-built student apartments are small, and the planning permit usually restricts occupancy to enrolled students. That restriction removes every buyer except another investor, and the owner cannot live there. Resale evidence is thin and prices are frequently below the original off-the-plan price.
Warehouse and office conversions
A converted warehouse can be a superb home and an awkward security. The issues are zoning (is residential use permitted or merely tolerated), mixed use in the building, fire and services compliance, and comparability: a loft with 5 metre ceilings and no bedroom walls has few comparable sales. Check zoning and permitted use in the Section 32 vendor statement before you bid.
The title group
The form of title decides what the lender can take as security.
Company title
You buy shares in a company that owns the building, and the shares carry a right to occupy a flat. There is no lot on a plan of subdivision to mortgage: the security is a charge over shares plus the company's consent, and the company can refuse to approve a buyer or a mortgage. Most lenders decline; those that lend want a large deposit and written consent before settlement.
Stratum title
Older than strata. You hold title to your unit, but common property is owned by a service company in which unit holders hold shares, governed by a company agreement rather than owners corporation legislation. More financeable than company title, less than strata. Lenders want the service company agreement and evidence of no unpaid liabilities. Compare both with owners corporation and strata in Victoria.
Multiple dwellings on one title
Buyers see multiple rents. Lenders see one asset that must be sold whole. Two dwellings on one title: most lenders consider it at a reduced LVR. Three or four: fewer lenders, lower LVR. More than four: generally commercial lending on commercial terms. Subdivision would fix it, but that is a planning process with its own cost and risk. See granny flat and dual occupancy finance.
The restricted-use group
Over-55s and retirement village units
Tenure varies enormously: some are ordinary strata, some leasehold, some a licence to occupy under a village contract. Only the first is straightforward. The other issues are the deferred management fee, which can consume a large share of the resale price, a resale process controlled by the operator, and a buyer pool restricted by age. Lenders that do lend cap the LVR well below standard. Have a lawyer read the village contract first.
Boarding houses and rooming houses
A property let by the room, usually with shared facilities and registration obligations under state law. Lenders treat this as commercial or specialised residential security: shorter terms, commercial pricing, and assessment based on the operation as much as the building. If it is registered as a rooming house, say so at the start.
NRAS and defence housing stock
Properties built under the National Rental Affordability Scheme were let below market rent in exchange for an incentive, under a long agreement. The scheme has been winding down and incentive periods ending, so check where the specific property sits. Defence housing stock comes with a long lease to a government entity, guaranteed rent and a management fee, but restricted access and a fixed term.
In both cases the lender assesses a property whose income and control are governed by an agreement it did not write. Expect a lower LVR and the rent assessed on the agreement's terms rather than a market appraisal. Read rental income and how lenders shade it.
Heritage-listed properties
A heritage listing restricts what can be changed, raises maintenance costs and can require specialist trades. Individually listed properties are treated more cautiously than those merely inside a heritage overlay. Most lenders still lend close to standard terms, but the valuation may be conservative and insurance costs more because reinstatement must match the original.
Worked example: a display home with a leaseback
Display homes sell with a leaseback to the builder at an above-market rent for one to three years, after which the rent reverts to market and you take vacant possession. The headline yield is attractive; the lender is looking at the reversion.
Take a display home at $900,000 in an outer growth corridor, leased back for two years at 6.0% gross, or $54,000 a year. Market rent once the display period ends is about $620 a week, or $32,240 a year.
The lender's view
- Servicing is generally assessed on the reverting market rent: $32,240 shaded at 80% = $25,792 counted, not $54,000
- The property is valued on comparable sales of ordinary houses, not on the leaseback yield
- Many lenders cap the LVR at 70% to 80% on a display home leaseback
The cash difference
| 80% LVR | 70% LVR | |
|---|---|---|
| Deposit | $180,000 | $270,000 |
| Loan | $720,000 | $630,000 |
| Repayment for illustration, at 6.00% p.a. over 30 years | $4,317 a month | $3,777 a month |
| Victorian stamp duty at the general rate | $49,070 | $49,070 |
| Costs, conveyancing and inspections | about $2,500 | about $2,500 |
| Cash needed | about $231,570 | about $321,570 |
Victorian duty on $900,000 is $2,870 + 6% × ($900,000 − $130,000) = $49,070.
The difference between the columns is $90,000, on the same house at the same price. Model your own numbers in the LVR calculator and the stamp duty calculator.
Note the cashflow trap too: your budget is built on $54,000 a year, but in year three the rent falls to about $32,240 while the repayment does not move. That is a $21,760 annual swing you need a plan for.
What to do before you make an offer
- Name the property type precisely to your broker: "serviced apartment", "company title", "two dwellings on one title". Not "a unit".
- Get the title and plan. The form of title decides half the answer.
- Get any agreement that governs the property: management agreement, leaseback, village contract, service company agreement.
- Have the security checked against several lenders' policies before you bid. An afternoon's work, and it tells you the real deposit.
- Keep a finance clause on a private sale. See subject to finance and what happens if finance falls through.
- Do not buy one of these at auction without confirmed finance. There is no cooling-off and no finance condition at a Victorian auction. Read buying at auction in Victoria.
Where the major lenders decline, a specialist or non-bank lender will sometimes proceed at a higher rate and a lower LVR. See private and non-bank lending.
Frequently asked questions
Why would a bank refuse to lend on a perfectly good property?
Because the decision is about resale, not quality. Lenders assess how quickly a property could be sold to an ordinary buyer with an ordinary loan if the borrower defaulted. Restricted occupancy, an unusual title, an operator agreement or a very small floor area all shrink the buyer pool, so the lender reduces the maximum LVR or declines the security while approving the same borrower on a standard house.
What is the maximum LVR on a serviced apartment?
Where a lender accepts one at all, 50% to 70% is the usual range, meaning a deposit of 30% to 50%. The rental income is often excluded from servicing because it comes from an operator agreement rather than a market lease, and the valuation is typically conservative. Policy differs sharply between lenders and changes without notice.
Can I get a home loan on a company title flat?
Sometimes, from a small number of lenders, at a reduced LVR. In company title you own shares rather than a lot on a plan of subdivision, so there is no ordinary title to mortgage. The lender takes a charge over the shares and needs the company's written consent to both the sale and the mortgage. Confirm that consent before you sign.
Is a display home leaseback a good investment?
It can be, provided you budget on the reverting market rent rather than the leaseback rent. Lenders assess servicing on what the property earns after the display period and value it as an ordinary house. The risks are the income step-down at the end of the lease, the make-good condition, and a maximum LVR lower than standard.
How many dwellings can I have on one title before it becomes a commercial loan?
Broadly, two dwellings on one title are considered by most lenders at a reduced LVR, three or four by fewer lenders, and more than four are generally assessed as commercial lending with commercial pricing and a shorter term. The exact cut-off is lender-specific, and council approval for the number of dwellings must be in place.
Talk to GNT Finance
If the property is anything other than an ordinary house or a standard strata apartment, get the security checked before you bid. We will tell you which lenders take it, at what LVR, and what deposit that really means. Gorakh Timilsina assessed loan applications as a senior credit officer before founding GNT Finance, so he reads security policy from the inside.
Book a free consultation or call 0426 403 703.
This page is general information only and not legal, tax or financial advice. Laws change — confirm current rules with the State Revenue Office, the ATO or a licensed professional.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.