Virtually all lenders in Australia have restrictions in place that determine the maximum loan amount and LVR they are prepared to lend, based on the location of a property.

These criteria are known as Postcode Restrictions, and they are put in place to protect the lender in the event that the borrower defaults on their loan obligations and the property needs to be sold to recoup the loan.

Typically, remote and regional locations present larger risks to the lender, and therefore they might not be prepared to lend as much money as would be the case in safer areas. However, postcode restrictions are often put in place in the CBDs or large cities, and in other areas where there are many high-density apartment buildings, as these locations can also see sharp price movements.

As a general rule, lenders will often be prepared to lend up to a 90% LVR (with LMI if applicable) in towns with a population of more than 10,000.

Postcode restrictions are often one of the conditions for achieving formal approval of your home loan.

It’s important to speak with your mortgage broker ahead of making an offer on a property, in order to ensure that your chosen lender does not have any postcode restrictions in place. Restrictions can also apply to certain unique types of dwellings and also to properties such as hobby farms.

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