Size Really Does Matter!
Navigating the property market can be confusing at the best of times; particularly when you’re trying to buy a small studio or 1 bedroom apartment, there is no room for error.
If you’re an apartment buyer, I strongly suggest that you tune in for the next few minutes as I tackle the subject of apartment sizing, what will the bank actually finance?
It’s never been more topical than it is today, as Australia has experienced an apartment boom over the past few years (as I’m sure you’re all very well aware). The Australian Bureau of Statistics has noted that there were over 110,000 high rise apartments under construction at the start of 2016 across Australia.
Naturally we are seeing more and more 1 Bedroom and Studio apartments that need to be financed. And it’s because of this, that you need to understand the implications that these smaller dwellings have on your ability to mortgage them.
As a bit of a benchmark, if the internal dimensions of your apartment are 50 Square Metres or above (excluding balcony), then there is usually a number of lender options in the market place that will finance these sorts of dwellings. But with that said, it’s a very different ball game when you dip below the 50 Square Meter mark. And whilst I would love to be able to come out and just say, this lender will do this, and this lender will do that. All these lenders have varying policy on what they deem as an acceptable size. And here’s the kicker, the lender will take other factors into account, does the place have a balcony or a car space? what is the location of the property? they will even consider your Loan to Value ratio as part of their criteria.
In terms of where you will find the dimensions of the apartment; they will be stipulated in the contract & strata documents: its these size numbers that you will need to verify with your conveyancer or property solicitor to ensure that we (the mortgage broker) have the appropriate information at hand that will allow us to pair you with a lender that fits your purpose. If there one thing I must stress here, do not rely on the sales and marketing advertisements, I’ve seen cases where the advert did not match the true size shown in the detailed contract!
Because of the way in which the banks stipulate their policy on suitable size requirements, the only way that we can tell you if it will work, is to do a specific analysis on you personally, as well as analysis on the property you are intending or wanting to purchase. It needs to all marry up.
Now you can probably understand that it’s a bit of a minefield for new entrants into the small apartment sector. I can’t stress how important it is that you use a specialist like myself, we will do the heavy lifting for you, so that you aren’t running around in circles chasing your tail, because the last thing you want, is to have your heart set on a place, exchange contracts and pay the 10% deposit, only to find out that you can’t finance the purchase and then risk losing your deposit if you can’t settle on the property. Not ideal at all!!
If you have any further questions on the topic of apartment sizing, please feel free to reach out directly to me!
0451 668 673