What conditions and restrictions apply to apartment loans?

The exact regulations and restrictions for apartment loans are affected by each lender's willingness to accept risk. Here are some common conditions for apartment loans. Size limits. Most lenders impose restrictions on the minimum size of an apartment. As a general rule, the apartment will need to be at least 45 or 50 square metres (excluding the balcony and any car spaces) in order to qualify for a loan. If your apartment is smaller than this, finding the funds you need may be quite difficult. Deposit requirements. Lenders will always consider the property value in relation to the loan amount, also known as the loan-to-value ratio (LVR). For small apartments of less than 40 square metres, you most likely won't be able to borrow more than 80% of the property's value, which means you'll need to have a deposit of at least 20% of the purchase price ready to go. The maximum LVR you will usually be able to borrow is 90%. Bedroom requirements. Many lenders will require the apartment to have a bedroom that is separate to the living area, which means they will not provide financing for studio apartments. Others may refuse to finance apartments in buildings with communal laundries. Limits to exposure. Some large lenders will also look to limit their exposure to individual developments. For example, once a lender has funded a certain percentage of purchases in a new apartment complex, it may refuse to offer loans for any more apartments in the same complex. Low doc. It's highly unlikely that you'll be able to find a lender willing to offer a low doc loan on a small or studio apartment. This is because the combination of a less marketable apartment with the increased danger of lending to a low doc borrower represents an unsatisfactory level of risk for many lenders. Property use. Some lenders will only finance loans for apartments designed for residential use. Properties that are managed as part of a hotel or resort, for example, may not qualify for a loan.

Is it harder to get a home loan for an apartment?

It can be harder to get a home loan for an apartment if the apartment is particularly small or if it is in an area with high apartment density. But typically getting finance for an apartment shouldn't be much harder than a house. Home loans for houses can also face obstacles, for example if you want to buy in a restricted postcode.