SEPP 5 finance
What is Sepp 5 zoning?
A Sepp 5 development is a specialized block of units, townhouse estate or village where the occupants are restricted to be either over the ages of 55, pensioners, disabled or elderly couples. These developments have approval from the local council to build more units on a block of land then what is usually allowed, this means the cost of each unit to build and sell is cheaper than the same type of units in the same area. This way it can be marketed better to the baby boomer generation.
These developments have been specifically designed to assist the day to day living for elderly people who require certain features for example:
- Access ramps in ever building
- In area medical centre
- Specialized bathrooms
- Larger doorways
- Public transport which comes straight to the development
- Meal deliveries
- Community activities
- Community with people of similar ages
- Low maintenance security upkeep
A Sepp 5 development is different to a retirement home, it is an independent living accommodation where the occupants has ownership of each separate title and there is no in-house nurse, there is no set time for dinner and activities. It is an over 55s friendly environment where the occupant is free to do what they please and is self reliant.
Why Invest in a Sepp 5 Security?
The reasons for purchasing a Sepp 5 accommodation to live in have been outlined above; the reasons for investing in one are below:
- Excellent rental yield
- Good price – for the price of the same unit dimensions unit in the same area Sepp 5 is generally cheaper
- Usually located in growing areas within 10 mins from major cities
- Usually cash flow neutral or positive
How can I apply for a Sepp 5 home loan?
Sepp 5 or over 55 securities are only taken on as standard securities by less than a hand full of financial institutions, depending the where the security is and the loan amount. Most banks are uncomfortable in lending against these securities as they believe that is harder to resell as it is a restricted market.
It is best to contact a specialist Mortgage Broker who deals in these kind of scenarios on a daily basis. You will have to show that you can afford to make repayments and have ongoing cash flow. Unfortunately if you are retired and on the pension then this will restrict the size of the loan that can be approved. However investors buying these properties to rent out can get approval for a mortgage.
About the Author Otto is a Mortgage Broker that has specialised in the credit guidelines of the major banks for over 7 years. His company the Home Loan Experts is now one of the top home loan broking firms in Australia. You can refer to their main website for more information about financing over 55s or Sepp 5 properties.
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