What the terms mean
- Dual key: one property on one title, built as two self contained living areas with a shared entry or common wall, each with its own key. Common in townhouses and new estates.
- Dual occupancy (duplex): two dwellings on one block. They may be on one title, or subdivided into two titles (strata or Torrens).
- Granny flat (secondary dwelling): a smaller self contained dwelling on the same lot as a main house. Rules on renting it out depend on your state and council.
Why lender policy matters so much here
Because these properties have a smaller pool of buyers than a standard house, some lenders treat them as higher risk. Policies differ on how much they will lend as a share of the value, whether they count the rent from both dwellings, and whether they lend on them at all. Two lenders can look at the same property and reach quite different answers, which is why this is one of the areas where a broker earns their keep.
Rental income
Lenders don't count rent at face value. They typically count about 80% of it, to allow for vacancies and costs, and some count less for unusual property types. Borrowable's calculator counts rent the same conservative way. For a dual key, ask whether the lender will use rent from both sides, and get a rental appraisal for each.
Valuations
Valuers compare a dual key or duplex with similar properties, and in areas with few sales they may value it as one dwelling with an extra room rather than two incomes. If the valuation is below the price, the loan is based on the lower figure. See new build valuations.
Before you commit
- Check the zoning and council approvals for two dwellings, and whether both can be rented separately.
- Confirm the title structure: one title, strata or Torrens subdivided. It affects resale, insurance and lending.
- Get your finance assessed on the specific property before you sign, not on a generic estimate.
- Model the numbers with the rent counted at about 80% and the loan assessed with the 3 percentage point buffer.
Sources
General information only, not credit advice. It doesn’t take your objectives, financial situation or needs into account. Rules and figures change; check them, or talk to Joshua, before you rely on them.