Apartment vs House Loans: What Not to Overlook

The loan for an apartment and the loan for a house can look the same on paper, but the total cost of owning each one is not the same. If you are buying around Varsity Lakes, compare the full monthly cost, not just the loan repayment.

Does the Type of Property Change Your Home Loan?

Yes, it can. The property is the security for your loan, and lenders look at what they are lending against when they assess your application.

That means an apartment and a house can be treated differently, even when the loan amount is identical. The lender may value the property differently, and the loan to value ratio (LVR) that applies can vary between lenders. A lower deposit relative to the property value can also bring Lenders Mortgage Insurance (LMI) into the picture. LMI is an extra cost, and it is usually added to your loan or paid upfront, so it is worth asking about before you commit to a deposit size.

A broker can compare how different lenders treat the property you have in mind. Our home loans page explains the range of options we can look at.

What Costs Sit Outside the Repayment on an Apartment?

The main extra cost for an apartment is the body corporate levy, which is paid regularly on top of your loan repayment. A freestanding house on its own freehold title has no body corporate levy, though it has its own upkeep costs. Houses, townhouses and duplexes in a community titles scheme do pay levies, so check the title and the body corporate certificate for either property type.

When you compare two properties, add any levies to the repayment so you are looking at one monthly figure for each. Check the levy period on the body corporate certificate. Divide a quarterly levy by three and an annual levy by twelve to get a monthly amount. Ask for the levy details before you make an offer, because they differ from one building to the next.

For a freehold house, you are responsible for maintaining the whole property, so set aside money for it. Apartment owners may also face special contributions on top of regular levies. Neither option is cheaper by default. The right choice depends on the actual numbers.

Apartment vs House: A Repayment Example

A smaller loan on an apartment can leave room in the budget for levies, while a larger house loan carries higher repayments. Here is how that looks in numbers.

Consider a buyer weighing up two Gold Coast options. The apartment needs a $500,000 loan and the house needs a $600,000 loan. Using an illustrative rate of 6.75% p.a. over 30 years on principal and interest, the apartment repayment is about $3,243 a month and the house is about $3,892 a month. That is a difference of roughly $649 a month. These figures are illustrative only and are not a current rate.

The buyer then adds the apartment's monthly body corporate levy to its repayment, and adds a monthly maintenance allowance to the house. Whether the gap narrows, closes or reverses depends on the actual levy and maintenance costs, so the buyer needs real figures for both. With the true monthly costs side by side, the buyer decides which fits the budget with room to spare. They also check the result against their borrowing capacity before moving on.

The same approach works for any pair of properties. Use a repayment calculator to run your own loan amount and rate, then add the running costs.

How Do You Choose Between a Variable Rate and a Fixed Rate?

A variable rate moves with the lender's decisions, while a fixed rate stays the same for a set period. The choice is about whether you value flexibility or certainty.

A fixed rate gives predictable repayments, but it can limit extra repayments and may carry break costs if you exit early. A variable rate usually offers more flexibility, but your repayments can rise. A split loan divides your balance between the two, so part is certain and part is flexible. The trade-off is that you manage two loan portions with different rules.

This matters more for apartment buyers working to a tight monthly budget, since levies are another cost that can rise. If your fixed term is about to end later, our fixed rate expiry page covers what to plan for.

Is an Offset Account Worth Having on Either Property?

An offset account can reduce the interest you pay by sitting against your loan balance. It suits both apartments and houses, as long as you actually keep savings in it.

The balance in the offset is deducted from the loan when interest is calculated. The trade-off is that loans with an offset account may carry a higher rate or an annual fee, depending on the lender. If you will hold only a small balance, the extra cost may outweigh the benefit. Check the product details before you choose.

Getting Home Loan Pre-Approval Before You Inspect

Home loan pre-approval gives you a borrowing range before you start making offers. It is not a final approval, and it can change if your circumstances or the property change.

This is useful in Varsity Lakes, where you may be looking at both apartments and houses within the same weekend. Knowing your range keeps you from falling for a property outside your budget. Because the property type can affect the final assessment, ask your broker to explain how the pre-approval applies to each option.

If you are buying your first property, the first home buyers page outlines how we support that process. If you already own a loan, a loan health check can show whether your current structure still suits you.

You can read more about our Varsity Lakes mortgage broker service. Call one of our team or book an appointment at a time that works for you, and we will look at your apartment and house options side by side.

Frequently Asked Questions