Studio apartments

What are studio apartments?

Banks define studio apartments as any unit that does not have a wall separating the bedroom from the living areas / kitchen. Generally studio apartments are very small, often less than 40 m2 and can even be as small as 25 m2.

They are also known as bachelor apartments, bedsitter units, bedsits or 1 bedroom apartments. Note that 1 bedroom units that have a separate bedroom to the rest of the living areas and that are over 50 m2 can be considered for normal home loans.

How much can you borrow?

First home buyer: 80% of the property value (restrictions apply).

Investor: 80% of the property value, must be outside of the inner city.

Low doc: 80% of the property value, must be outside of the inner city.

Inner city studio apartments: 80% of the property value (Inner city units are defined by the number of units in the block, height of the block and postcode of the property. Refer to our inner city units page to find out if lenders would assess your unit as being a high risk property).

Discounts: Competitive professional package and basic loan discounts are available.

Note: Most lenders restrict the amount you can borrow or even decline the loan outright! That being said at least one of our mortgage lenders will approve up to 80% of the property value. As a general rule units greater than 25 m2 can be financed however we have seen an 18 m2 unit be approved as security for a loan. There is the possibility to make some exceptions.

Why are the banks so conservative?

Australian lenders believe that small units are unusual properties and that there are less potential buyers that would be interested in these properties. As a result they believe that they may take longer to sell than ordinary units.

In our opinion this is an outdated policy. Many young Australians prefer to live on their own in units from 25 m2 ranging to 30 m2 for studio apartments and 30 m2 to 40 m2 for smaller 1 bedroom units. The average household size has been shrinking and more people prefer to live in a block with facilities such as a swimming pool, gym or sauna which are often a feature of studio apartments.