Patrick was told he would have no trouble getting a mortgage… then he was rejected for a bizarre reason after finding his dream place

A young Australian has fallen out after being denied a mortgage because he wanted to buy in a high-density neighborhood with his partner.

Patrick Curtis was surprised by the rule when he and his partner were looking for an apartment in Sydney’s southern suburb of Zetland.

“After we completed all the steps and kept the bank informed, including what we were looking for, they assured us that everything was fine,” he told NCA Newswire.

“This was until we got to the very last step and they told us we couldn’t secure the mortgage because it was in a high-density area.”

The couple was blindsided by the bank’s rejection and frustrated by their lender’s lack of communication about the rule’s existence.

“Not once was this mentioned by the bank until we heard about this opportunity from an outside source and had to ask about it,” Mr Curtis said.

The couple’s bank told them they would have a better chance of securing the loan if they could save a 20 percent down payment.

They were also discouraged from applying for government assistance, such as initial homebuyer assistance.

Mr Curtis said he and his partner were angry, but they were also confused because it felt like the lending rules were aimed at wealthy people buying property.

The couple changed banks and got a loan from their new lender.

Money.com.au mortgage expert and Soren Financial director Mansour Soltani told Daily Mail Australia that each lender does a “risk assessment for each suburb” and calculates how much risk they want to expose themselves to in a particular area.

“(They will look at) high density apartments and lenders will ask for a larger down payment,” he said.

‘Generally this is the case if the apartment building is more than ten floors and the entire suburb is covered in apartments, think of Zetland in Sydney or Docklands in Melbourne.’

Mr Soltani said banks are also looking at mitigating natural disasters, such as flood zones, and may take into account low population density and scarce employment in an area, which can make it “more difficult to sell real estate”.

“We’ve had cases where a bank already had too many customers in one complex and didn’t want to take any more risk in that particular building,” he said.

The mortgage expert said banks are also wary of small square footage, typically found in studio apartments, and may require a larger deposit if a home is smaller than 500 sq ft.

Patrick Curtis was surprised by the rule when he and his partner were looking for an apartment to buy in Zetland, central Sydney (stock image)

“It depends on the lender, they are all independent companies with their own risk appetite, but generally they don’t lend to a studio because it’s harder to sell,” he said.

Mr Soltani said buyers can deal with their lender’s ‘risk appetite’ by having their estate agent or bank check a suburb beforehand if they are interested in that area.

While it would be ideal if banks informed borrowers of their concerns in advance, this is not always practical.

“It’s difficult because people focus on certain suburbs but don’t always buy there. It’s just best if borrowers check this out,” he said.

‘A good broker does these checks in advance.’

The mortgage expert advises first home buyers to be in ‘constant communication’ with their agent or lender to ensure they are ‘comfortable’ with the property they would like to make an offer on.

“This is how you prevent problems,” he said.

“(But) remember, just because one bank said no doesn’t mean others will.”