Need home loan to buy a unit in the city

Any general questions you might have in regards to loans and finance.
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afish
Posts: 63
Joined: Mon Jun 15, 2009 4:46 pm

Need home loan to buy a unit in the city

Post by afish »

Hey, I started working at an IT company in 2012 right after I graduated from college. I have been living in a rented apartment in Queensland but now I have decided buy an apartment nearby.

Anyway I’m a bit concerned about what my friend told me – he said that getting a loan for an apartment in the city can be more difficult than getting loans for other types of properties. Is this true?

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Otto Dargan
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Re: Need home loan to buy a unit in the city

Post by Otto Dargan »

Hi and welcome to the forums afish,

The price of inner city units fluctuate more than any other types of property. There have been times when several cities in Australia have been flooded with low priced units. Due to this lenders see these units as a high risk because they could make a loss by lending you the money.

Nonetheless all lenders have their own lending policies regarding inner city units and there are lenders who can approve your home loan if you meet their requirements.

In Queensland these postcodes and suburbs are considered as “high density” and high risk areas:
  • QLD Postcodes: 4000, 4001, 4002, 4003 & 4004.
  • QLD Suburbs: Brisbane, Petrie Terrace, Spring Hill, City East, Wintergarden & New Farm.
Please note that even though many Gold Coast Apartments are technically not in the inner city of capital city lenders still consider them as a high density location.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

afish
Posts: 63
Joined: Mon Jun 15, 2009 4:46 pm

Re: Need home loan to buy a unit in the city

Post by afish »

Well, I haven’t chosen an exact location yet but I’ll try to avoid the areas you’ve mentioned. Besides the location can you tell me what I will need to keep in mind while choosing an apartment?

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Otto Dargan
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Need home loan to buy a unit in the city

Post by Otto Dargan »

Hi afish,

When choosing an apartment it is best to find out the following things:
  • Are there any plans to have more buildings nearby which could block your views? To find out about this you can contact the local council.
  • Are there any new developments being built nearby? If there are many units up for sale then this could reduce the price when you are buying however it can be difficult for you to sell later.
  • How big is the block? It is easier to finance units which are 50 m sq and larger (excluding balconies and car spaces). If you want to buy a smaller unit of less than 40 m sq then you may be limited to only borrow up to 80% of the property value.
  • How much are the strata fees? You will usually have to pay more in strata fees if the property has a lot of extra amenities and facilities such as lifts, spas and gymnasiums.
  • How old is the block? Blocks that are older than five years usually have lower capital growth while newer units are usually sold above the market price.
Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

afish
Posts: 63
Joined: Mon Jun 15, 2009 4:46 pm

Re: Need home loan to buy a unit in the city

Post by afish »

I didn’t know all this mattered when buying a unit. Thank you so much for sharing it!

moodyjack
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Joined: Wed Jun 17, 2009 4:36 pm

Re: Need home loan to buy a unit in the city

Post by moodyjack »

Hey, I came across this topic when I was searching for info on city units. You have already mentioned most of the things that I wanted to know about but what I really want to know is how much I can borrow. Are there any restrictions on this as well?

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Otto Dargan
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Location: Sydney, Australia
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Re: Need home loan to buy a unit in the city

Post by Otto Dargan »

Hi moodyjack,

As mentioned above, the size of the unit can affect how much you can borrow. If the unit is greater than 40m sq and less than 50m sq then you may be able to borrow up to 95% of the property value. If the unit is less than 40m sq then you be limited to borrow only up to 80%. This size is excluding the balconies and car spaces.

The amount of loan you can borrow also depends on the following:
  • If you are first home buyer then you can borrow up 95% of the property value (some restrictions apply).
  • If you are using the unit as an investment property then you can borrow up to 95% of the property value.
  • If you are applying for a low doc loan then you can borrow up to 80% of the property value.
Competitive professional package and basic loan discounts may also be available while buying a unit.

Please note that most lenders restrict the amount you can borrow quite significantly (often 80% of the property value or less). Several lenders may also not lend to first home buyershowever we do have one lender who can approve up to 95% of the property value.
If you would like to know more on this then you can call us directly on 1300 889 743 or you can send us an online enquiry.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

moodyjack
Posts: 47
Joined: Wed Jun 17, 2009 4:36 pm

Re: Need home loan to buy a unit in the city

Post by moodyjack »

Okay, thanks for the information. I will call you in a day or two :)

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