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Are you thinking about buying an apartment? Whether it's your first home, an investment, or a cozy downsizing option, apartments have become an increasingly attractive choice for property buyers. In this easy-to-follow guide, we'll walk you through all the vital information you need to make an informed decision about purchasing an apartment.
Where to Begin:
Let's start at the beginning. Before you jump headfirst into apartment hunting, take a moment to reflect on your lifestyle and long-term goals. Ask yourself:
It's wise to consult with friends and family members who've experienced apartment living. And remember to explore online listings to get a feel for what's available in the market. Once you're ready to embrace apartment living, you can confidently venture forth into the process.
How Much Can You Afford:
It's no secret that money matters when it comes to buying an apartment. Let's talk finances.
Deposit: To get that property loan in Australia, you need a deposit. As a first homebuyer, you'll only need 5% of the purchase price. However, if this isn't your first property, you would need to come up with 20% to avoid paying Lenders Mortgage Insurance (LMI). LMI can be paid upfront or added to your loan, which allows you to buy your dream apartment sooner. However, remember that it adds to your debt, incurring interest costs.
Borrowing Power: Banks are picky about how much they're willing to lend you. They don't just look at your deposit; they consider your income, expenses, and the money left over to repay your loan. The more money you can spare, the more they're willing to lend. Utilise borrowing power calculators as a general guide, but always consult with a financial advisor for a precise assessment.
Getting Pre-Approval:
Agents usually want to know that you have pre-approval before you make an offer or register for an auction. This pre-approval, also known as conditional approval, means you approach your chosen lender, and they scrutinise your financial health. The lender then determines how much they're willing to lend and sets any conditions. It's not a 100% guarantee, as the final loan application considers several other factors. But it's a thumbs-up from the lender that your application looks promising. Remember, pre-approval needs renewing every 90 days.
Where to Buy:
Location, location, location – it's a golden rule in real estate. Apartments are no different. Here's what to look for:
Keep in mind that lesser-known suburbs can offer more value for your money, especially if you're looking for an investment opportunity.
Buying New vs. Established Apartments:
Another critical choice is whether to opt for a new or an established apartment. Both have their pros and cons. New developments often come with modern layouts, attractive decor, and enticing amenities like pools and gyms. You may also enjoy benefits like stamp duty savings or first-home owner grants.
On the flip side, older apartments may offer more space, affordability, and character. Renovations are often an option, which can boost your investment. However, they may come with higher maintenance costs due to aging infrastructure. Ultimately, the choice between new and established apartments boils down to your personal preferences.
Research:
A thorough research dive is crucial when it comes to apartment shopping. Beyond the basics, consider these vital aspects: