Planning for your first home loan?
Investing in a unit or an apartment could be one of the excellent stepping stones on the property ladder in case you have fund issues for buying a house. As per CoreLogic data, the unit values are appreciating much faster than those of house in over half of all the areas across Australia.
In addition to the factor of affordability, the units or apartments offer various other investment benefits. Below listed are some of the pros & cons of investments in an apartment viz-a-viz a house.
Pros of investing in an apartment with a First Home Loan
A more affordable entry point
There is a significant difference in the median prices in Australia’s capital cities for houses which is $975,592 and those of apartments as $669,434. Clearly, the apartments are more affordable than houses, thus, you will need to save a lower deposit (typically around 20% of the purchase price). Additionally, you may find it easy to service the first home loan on an apartment.
Fewer maintenance responsibilities
While owning a house, you have to bear the full cost of repairs and maintenance. However, with a unit or an apartment, these underlying costs get shared among the other owners of the unit.
Moreover, in general, the units require less maintenance as compared to houses which may have lawn requiring additional maintenance which is not the case for a unit. So, it may be easier for you to manage the repayment of your first home loan.
Certain expenses can be more affordable
Certain expenses can be economical when you own a unit. For instance, council rates are usually higher for houses and may even include land taxes in some states. Lower fees on an investment apartment can potentially yield higher returns.
Potentially higher rental yield
The apartments often yield high rentals in comparison to the houses as you can invest less money to acquire a similar rental income. This helps put you in a better position to cover your mortgage repayments, first home loan installments & other expenses.
Cons of investing in an apartment
Strata Fees
You have to factor in the body corporate fees which has to be paid in the strata scheme, thus, may affect your present budget. The strata fees can be costly and may rise over time, especially if the property has amenities like an onsite manager, pool, tennis courts, barbecue area, and gym, etc.
Restrictions
There may be restrictions on various aspects like for renovating your apartment, you may require approval from the strata committee, especially when the proposed changes may affect the outer look or the shared utilities. There may also be restrictions on having pets, which could reduce your tenancy pool.
Oversupply Can Affect Your Investment
Purchasing an apartment in an area with many high rise buildings under construction can affect your property’s capital growth, the rental yields, and the tenant demand. So, the experts suggest seeking low-rise apartments in areas with planning rules that limit the number of apartment buildings.
Want to discuss your First Home Loan Finance?
Whether you’re looking to buy a small studio apartment, a larger unit, or a house, Loan Junction can help you in guiding you all finance options for your first home loan. Our team of experts will guide you through the investment loans available and explain the ones that may suit your financial situation and goals accordingly.
Get in touch with us today!
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