Do apartments present a better opportunity for homebuyers?

The permanent security of a home is something we all strive for.

But with the property market being the way it is - where housing costs are more than many young Australians might be able to afford - perhaps a unit is the way to go.

In a way this type of smaller property can be more accessible because they tend to be cheaper. It then stands to reason that your home loan might be for a lesser amount than with a standard house, and that’s a good thing. Moreover, with a smaller amount taken out, it can spell a shorter repayment period for your loan too.

With many different apartment floorplans available in 2023, unit spaces are not limited to the lifestyle of a university student or young couple anymore. In fact, some units are quite large and accommodate families.

So on that note, you might be wondering what other benefits can come from buying a unit. Let’s explore some features in brief.

The pros of buying an apartment 

Firstly, there’s a convenience that comes with purchasing an apartment that you might not find in a house. 

Here are some examples of that convenience: 

Amenities. Gym, pool, outdoor barbeque, playground - these are just some of the niceties that may be included in an apartment complex. 

Location. If there’s a suburb you’d like to live in but the cost of a house is out of your price range, a unit can be an excellent alternative in a handy location. 

Lower maintenance costs. The building management and/or strata will also take care of general repairs and upkeep of the common areas. Whereas, in a house, it will be your responsibility to front these costs, which are typically higher.

Features. Some units have a different layout to others, with only a small gap in price. It can be noted then that as an apartment costs less, you might have a little more freedom in choosing the design you want in your home. So don’t rule out that balcony with an amazing view just yet. 

If you think purchasing an apartment might be the better move for you, you probably want to know a bit more about home loans first. 

Let’s have a look. 

Getting a home loan for an apartment

As a home loan is a big financial commitment, even with a unit, there are many features to think about when obtaining one. Here are a few to get you started:

• Interest rates 

One option is a variable interest rate, where the interest you pay can change over the course of your loan. It can sometimes be higher or lower than the official interest rate set by the Reserve Bank.

Meanwhile a fixed interest rate means that you would be paying a fixed amount of interest for a period of time. This can be good if you want to know the exact percentage you’ll be paying each time. 

The amount of interest you will pay on either will depend on your home loan product and how that given provider sets its rates based on the broader cash rate.

• Extra repayments

Some providers offer free extra repayments. So on top of the usual payments you make, you might also like to add more. A little can go a long way in reducing your loan term and ultimately the amount of interest you end up paying on top.

• Fees

There can be various fees attached to a home loan, such as those that are ongoing or upfront. However, the types of fees and the amount you might be required to pay is subject to the home loan option that you choose.

So as the potential costs involved can vary, it’s important to consider your situation to best weigh up your options.

Choose the right home loan for you

At Mozo, our team of experts have sourced the top home loan products out there. If you don’t know where to start, why not compare some of the best available home loan rates below!