Whilst micro-apartments have certainly become more popular in recent years, particularly within the CBD areas of Melbourne and Sydney, there is one aspect of these particular types of property that is being overlooked by some investors, and it is important that everyone is aware of it.
If you are considering buying a micro-apartment, whether to live in yourself or to rent out, you should be aware that not all lenders are keen to provide a mortgage loan on smaller apartments. One reason for this is that some lenders view micro-apartments as more difficult to sell, which can be of concern if the borrower defaults on their repayments.
The result of these concerns is that some of Australia's biggest home lenders place extra restrictions on lending for any property below 50 square metres in size. For example, our sources tell us that the ANZ Bank will lend on apartments above 30 square metres, but require a 40% deposit.
Others have said that Westpac is reluctant to lend on anything below 50 square metres, although it does exercise some discretion in certain cases. We’ve also heard that different lenders will be flexible in this market, depending on what features are built into the apartment.
It is also worth noting that most However, it is worth noting that most of the Mortgage Insurers are reluctant to deal with an apartment that is below 40 or 50 square metres.
The important message for anyone thinking of buying a micro-apartment is that just because you have your finance “approved in principal”, that does not mean it applies to every type of property.
So be sure to do your homework thoroughly before you commit to a specific purchase.