Apartment living is becoming an increasingly attractive option for property buyers. Whether you’re looking for convenience, location, affordability, luxury or a good investment, there are plenty of reasons the high-rise lifestyle could be just right for you. However, before you begin the search it is important to remember that the process will be different to purchasing a stand-alone house. It may include visiting older established apartments and open houses, but you will also dive into the exciting world of a new build. Buyers will learn about buying off the plan, visit display suites and discover how to build a dream unit from scratch. So, this comprehensive guide will help you navigate every step in the process to find the right apartment for you – regardless of whether it is a first home, the perfect investment or a comfortable downsizer.
It may sound obvious, but the best place to start the apartment buying journey is to make sure it is going to suit you and your lifestyle. This means considering how long you will live there and whether it is suitable now and in the future.Are you planning for a family?Do you want to live close to the city?What about having a pet in an apartment?Do you want to build equity in your property?Do you mind living close to your neighbours and how important is a backyard?These are all questions you should be able to answer before throwing yourself into the process.
Talk to family about their lifestyle choices and how those choices have impacted their property needs.Ask friends who live in apartments what it is really like and, of course head online to see what is on offer.Once you commit to the apartment lifestyle then you will be able to confidently make the decisions needed to make your high-rise dream become a reality.
Similar to any major investment, finance is a crucial first step.Most of us don’t have hundreds of thousands of dollars sitting in the bank, so typically you will need to get a loan.This means you need to consider how much you have saved, what you can afford and how much lenders are willing to loan you.
To get a property loan in Australia, you will need to have saved some money as a deposit.At a minimum some lenders will require 5% of the purchase price, which equates to about $25,000 for a property worth $500,000.However, most lenders require 20% of the purchase price – excluding the funds needed for additional transaction costs – which is around $100,000. If you have 10%–20% saved, some lenders may still happily lend to you, but will charge Lenders Mortgage Insurance (LMI).This is insurance that protects the lender if you default on your loan.
The premium is paid in a lump sum and added to your loan.This means you can snap up your dream home sooner without having to allow more time to save.On the downside, LMI can add thousands of dollars to your debt that you will be paying interest on.In some circumstances, a developer may accept a partial deposit payment of under 5%, with the remainder to be accrued during the construction and paid by a certain deadline.
Banks have extremely strict rules and regulations when it comes to figuring out how much they can lend.This means they will not just look at your deposit but how much you earn, your expenses and how much you have left over to pay off the loan.The more spare cash you have, the more they will be willing to lend you.The realestate.com.au borrowing power calculator can be used as a general guide for how much money you can loan.However, it is important not to rely solely on these as they do not factor in all your personal circumstances. Always seek professional financial advice.
In most cases, if you want to make an offer on an apartment or register to buy at an auction, agents will want to know that you have pre-approval – also known as a conditional approval.Pre-approval involves a buyer approaching their preferred lender and being assessed on their expenses and income.The lender will then be able to determine how much they are willing to lend and if they have any conditions.This pre-approval is not a guarantee as the final loan application will take several other things into account. But it is a lender telling you that, on face value, your application is viable.Once you have it you can more confidently bid at auction or make an offer, but it must be renewed every 90 days.
It is a simple fact of real estate that location matters.The benefit of apartments is that they usually offer a way to get your foot in the door in areas that may be out of your price range when searching for a house.When locking in a search area,it is important to make sure it’s somewhere you want to live but also ask yourself: is there access to transport, what are the demographics of the area, are there good schools nearby, what types of apartments are on the market and are there parks or outdoor spaces and cafes nearby?
If you’re buying an apartment as a long-term investment,you should also consider whether the area is in high demand among renters and whether the location will help your purchase hold its value overtime.It is also worth considering surrounding suburbs.Often lesser known locations offer up lower prices and give buyers more bang for their buck.
Buying an apartment can be a great long-term investment but whether to buy old or new is often hotlydebated among property watchers and buyers.New developments offer modern layouts and décor, and can drum up more interest among tenants if you’re hoping to rent it out.Developments that are new also generally have fancy pools and gyms, access to parking and come with stamp duty savings or first-home owner grants.
Older apartments on the other hand can be more spacious, more affordable, and have more character.There is also the opportunity to renovate and add more capital value.They may have lower owner’s corporation fees owing to fewer amenities, but there may be additional maintenance costs associated with an older building.In reality both have advantages and disadvantages so it purely comes down to abuyer’s personal preference.
Research, research, research – it is the golden rule of property buying and is extra important when it comes to apartments.In fact, it is probably more crucial as there are more variables to consider.Research can be as basic as knowing the location, property values, average rental value and apartment occupation rates.But certainly, there is more in-depth information you should look for.
If you’re buying new it is a good idea to look into the developer and builder to ensure their previous works are known for quality or whether they have a shoddy record.Check if there are any by-laws that owners and tenants must abide by, including restrictions on pets and visitors, bans on short-stay letting and how the owner’s corporation deals with disputes.Finally, contact your local council and get information about any planned or potential developments in your area.This means you will know in advance whether another apartment building is in the planning pipeline that will ruin your view or your privacy.
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