Studio Apartment Home Loans

What Is A Studio Apartment?

In Australia, a studio apartment is a self-contained unit with an open-plan living, sleeping, and kitchen area, as well as a separate bathroom. They are typically smaller than standard apartments, often around 25–40 m².

Lenders distinguish studios from 1-bedroom apartments (which have a separate bedroom) and often apply stricter lending criteria to smaller properties, particularly those under 40–50 m².

How Much Can I Borrow For A Studio Apartment?

The maximum amount you may be able to borrow often depends on the size of the unit:

• Up to 95% of the property value if the studio apartment is more than 50 m²
• Up to 90% of the property value if the studio apartment is between 40 m² and 50 m²
• Up to 80% of the property value if the studio apartment is between 18 m² and 40 m²
• Properties smaller than 18 m² are generally not accepted by lenders

Borrowing more than 80% for a unit under 40m² can be difficult because many lenders apply stricter rules to smaller properties. One possible solution is a guarantor home loan. By using a family member’s property, often your parents’ home, as additional security, some lenders may allow you to borrow up to 100% of the purchase price.

Who Buys Studio Apartments (And Why)?

First-home buyers

Studio apartments can appeal to first-home buyers because they usually offer a more affordable way to enter the property market. In higher-priced suburbs, buying a studio may allow someone to purchase sooner rather than waiting longer to afford a larger property. For this group, the main attraction is often market access, getting a foot on the property ladder.

Young professionals

Young professionals are often attracted to studio apartments because they suit a fast-paced, inner-city lifestyle. For buyers who spend a lot of time at work, commuting or socialising, living close to the CBD, transport, dining and entertainment can matter more than having extra space. For this group, the key benefit is usually convenience and location.

Investors

Investors typically assess studio apartments from a returns and demand perspective. A lower purchase price can reduce the upfront cost of investing, while a well-located studio may attract steady tenant demand in areas close to jobs, universities and transport. For this group, the appeal is usually the potential for rental yield and tenant appeal, rather than owner-occupier lifestyle benefits.

Why Unit Size Matters For Home Loans

Every lender has their own guidelines as to the minimum unit size that they’ll accept. Typically, most lenders won’t accept units that don’t have an internal living area (excluding balconies & car spaces) of 50 m².

We have lenders that can consider smaller properties, depending on the percentage of the property value that you need to borrow.

In addition to this, a one bedroom unit is seen as a lower risk than a studio apartment. This is because lenders believe having a wall between the bedroom and the living area makes a unit more marketable.

Please note that the sizes mentioned are in meters squared and are exclusive of balconies and car spaces, referring to the internal living area of the unit.

Apply For A Studio Apartment Home Loan

Want to buy a studio apartment but not sure which lenders will actually say yes? That’s where we come in. Our specialist mortgage brokers understand the lenders that may consider studio apartments and can help you work out your next move.

Call us on 1300 889 743 or fill in our freeonline assessment form to get started.