How to Secure Financing for NDIS Property Investments

Securing financing for Specialist Disability Accommodation (SDA) properties requires a clear understanding of the specific steps involved. This type of investment is niche, and lenders take a different approach compared to traditional real estate. By following these steps, investors can increase their chances of securing a loan and making their NDIS property investment a reality.

Ensure a Solid Credit Profile

Your credit history plays a key role in how lenders assess your loan application. A strong credit score shows lenders that you’re a reliable borrower and capable of meeting your financial obligations. If your credit profile is solid, you’ll be in a better position to negotiate favourable interest rates and loan terms.

Lenders will also review your employment status and income stability. Demonstrating consistent income streams reassures lenders that you can handle mortgage repayments, especially for a long-term investment like SDA property.

Have a Deposit (or Equity)

Like most home loans, you will need a deposit. For SDA property, lenders typically require a deposit of at least 20% of the property’s value. A larger deposit may improve your chances of approval and may also lead to more favourable loan terms, such as lower interest rates. If you already own a property, equity can also serve as a deposit. This involves using the value of your existing home to secure additional financing, making it an effective way to leverage your assets for future investments.

It’s important to choose a lender or property valuer who understands the niche nature of SDA property. If a specialised lender is not used, the valuation of the property could come in far less than the true value of the property. This heavily reduces the borrowing capacity, making it more difficult to secure a loan.

For example, if a property is valued as a regular residential 4-bedroom house, the valuation might come back as say $500,000. If the lender will provide 70% of the property value, this means the borrower can only access up to $350,000 — when in reality, the finished home’s true value will be much higher than this, and will require more funding to build. Because of the specialised nature of SDA properties, they are more expensive to build than regular residential homes, so if the true value is not taken into consideration, the borrower may not be able to access enough funding to build the home. 

Ensure SDA Payments are Taken Into Consideration

Again, the correct lender needs to be used to ensure SDA funding is included in the expected rental return calculations for serviceability requirements. The expected rental return is used as income when a lender is determining how much a borrower can repay. The SDA funding that comes with this type of property investment means the rental return can be much higher than that of a traditional residential investment property. Without the SDA funding taken into account, the lender could determine that you’re not able to repay the loan, when in reality, you could. 

Your Investment Journey

Securing financing for NDIS property investments requires careful preparation and a strategic approach. By ensuring a solid credit profile, having a deposit or leveraging equity, and selecting a lender experienced in SDA properties, investors can significantly improve their chances of success. With the right knowledge and support, property investors can navigate the complexities of financing and make meaningful contributions to this essential sector, ultimately creating valuable housing solutions for individuals with disability.

Get in touch with Apollo Investment for expert guidance on navigating the world of NDIS property investment and ensuring your financing strategy is tailored to your needs.

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