Small properties and tiny studio apartments have become increasingly popular in the last few years as home buyers seek affordability in cities with escalating property prices.
Back in May of last year we had a look at what at the time was considered the smallest house in Sydney. The tiny Rozelle property only had room for a bed and a kitchen.
A few months later we read about this Bondi property known as the “bolt-house”. The property was described as “intimate” and was a remarkable 16 square metres. Further afield, this US apartment made headlines in 2011 after claiming to be the smallest in all of New York City!
In Melbourne we are seeing a move towards minuscule New York styled apartments. The Herald Sun recently reported how “sizes have reduced to as little as 38sq m in some city apartments, squeezing a bedroom, bathroom, living space and kitchen into an area only slightly larger than the average living room or double garage.”
For all the affordability that a small apartment provides, however, there is a catch. There are often strict lending rules around studios that prevent those without sizeable deposits from buying in.
Buyers will typically require a deposit upwards of 20 per cent to buy an apartment with less than 50 square meters in floor area and Lenders Mortgage Insurance (LMI) is often more expensive as well.
Typically a studio apartment – defined as “any unit that does not have a wall separating the bedroom from the living areas / kitchen” – will require a floor area no less than 40 sq. /m and have a maximum loan to value ratio of 60%.
If you’re interested in buying a studio apartment, it’s a good idea to understand the options available to you for a home loan. Speak to an expert Aussie Broker who can search hundreds of loans from multiple lenders very quickly to find you the right home loan for your needs.