Understanding Company Title Unit Mortgages in Australia
Navigating the world of property investment often comes with its complexities, especially when it involves unique ownership structures like company title units. If you are eyeing a property under such a title, understanding how to secure a mortgage is crucial. This article delves into the intricacies of company title unit mortgages in Australia, offering practical advice and highlighting common mistakes to avoid. With insights from Esteb and Co, a trusted name in mortgage brokerage, you’ll be well-prepared to embark on your property investment journey.
In This Article
What is a Company Title Unit?
A company title unit is a unique form of property ownership in Australia, predominantly found in older apartment buildings. Instead of owning the apartment itself, buyers purchase shares in a company that owns the building. These shares grant the right to occupy a specific unit. While this structure can offer benefits like potential cost savings and community control, it also presents challenges, particularly when seeking finance.
Why Company Title Units Pose Financing Challenges
Lenders often view company title units as higher risk compared to strata title properties. This perception stems from the complex ownership structure and the potential difficulty in selling such properties. Consequently, fewer lenders offer mortgages for company title units, and those that do may impose stricter lending criteria. Borrowers might encounter higher deposit requirements, typically around 20-30%, and less favourable interest rates.
Practical Tips for Securing a Company Title Unit Mortgage
1. Research Lenders Thoroughly
Given the limited number of lenders willing to finance company title units, it’s imperative to research thoroughly. Start by identifying banks and lenders with a history of handling such mortgages. Esteb and Co can assist by leveraging its network of lenders to identify those most likely to consider your application favourably.
2. Strengthen Your Financial Profile
A solid financial profile can enhance your chances of securing a loan. Ensure your credit score is robust, reduce existing debts, and have a stable income stream. Lenders will scrutinize your financial health more closely due to the perceived risk of company title units.
3. Provide Comprehensive Documentation
Prepare detailed documentation, including proof of income, a list of assets and liabilities, and any other financial statements. Additionally, having a thorough understanding of the company’s articles of association and your rights as a shareholder can be beneficial during the application process.
Common Mistakes to Avoid
1. Ignoring Legal Advice
Failing to seek legal advice can lead to misunderstandings about your rights and obligations under a company title. Engaging a solicitor experienced in property law can help clarify these aspects.
2. Overlooking Building Management
Company title units often involve close community living and shared decision-making. Understanding how the building is managed and your role within it can prevent future conflicts and ensure a smoother living experience.
How Esteb and Co Can Help
Navigating the complexities of company title unit mortgages requires expertise and industry connections—qualities Esteb and Co pride themselves on. Our team offers tailored advice, helping you understand lender criteria and improve your application’s strength. With our extensive network, we can connect you with lenders who are open to financing company title units, thus enhancing your chances of success.
Frequently Asked Questions
Q: What is a company title unit?
A: A company title unit is a property ownership structure where buyers purchase shares in a company, granting them the right to occupy a specific unit within a building.
Q: Why do lenders consider company title units risky?
A: Lenders view these units as risky due to their complex ownership structure and potential difficulty in resale, leading to stricter lending criteria.
Q: How much deposit is typically needed for a company title unit mortgage?
A: Deposits for company title unit mortgages can range from 20-30% of the property's value, reflecting the higher risk perceived by lenders.
Q: Can Esteb and Co assist with securing a company title unit mortgage?
A: Yes, Esteb and Co can provide expert guidance and connect you with lenders willing to finance company title units.
Q: What should I consider about building management in company title units?
A: Understanding the management structure and your role within it is crucial, as company title units often require shared decision-making.
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With direct experience helping Australians secure home loans, car finance, and business funding, Ricky founded Esteb and Co to bring transparency and technology to mortgage broking.