Apartment vs House Financing: Avoid These 3 Mistakes

Lenders assess apartments and houses differently, and that difference shows up in your loan amount, interest rate, and upfront costs.

If you're weighing up an apartment on Scarborough Beach Road against a house on one of Doubleview's quieter streets, the financing side matters as much as the purchase price. Lenders apply different criteria depending on what you're buying, and those differences can mean a smaller loan, a higher rate, or an extra few thousand dollars in Lenders Mortgage Insurance (LMI). Knowing where the differences sit means you can structure your home loan application to match the property type from the start.

Loan to Value Ratio Caps Differ Between Property Types

Most lenders will lend up to 95% of a house's value, but apartments often cap out at 90%.

That five percent gap changes how much deposit you need and whether you'll pay LMI. Consider a buyer looking at a two-bedroom apartment near the Doubleview IGA precinct. If the lender caps the loan at 90%, a 10% deposit becomes mandatory even if the buyer qualifies for a higher LVR on a house. Some lenders go further and apply stricter caps to apartments in buildings over a certain height or with more than 50 units, which can include some of the newer developments closer to Scarborough and Karrinyup.

The LVR cap also affects LMI calculations. Because LMI premiums increase as the LVR rises, a 90% loan on an apartment might attract similar LMI to a 92% loan on a house. If you're comparing properties and trying to keep upfront costs down, that LVR difference is worth running through a calculator before you settle on a property type.

Strata Title Properties Attract Additional Lender Scrutiny

Lenders review the strata report for every apartment, and certain findings can reduce your loan amount or block approval altogether.

A low sinking fund balance, upcoming special levies, or a high percentage of investor-owned units can all trigger lending restrictions. In Doubleview, where some older apartment blocks sit alongside newer developments, the age and financial health of the strata plan varies widely. A building with deferred maintenance or a sinking fund below $50,000 might not meet a lender's criteria, even if the apartment itself is well-maintained.

Lenders also check whether the strata plan includes commercial tenancies or short-term rental provisions. If more than 20% of the building is non-residential or if short-term rentals are permitted, some lenders won't proceed at all. Others will lend but at a lower LVR or with a rate loading. If you're looking at apartments near the Glendalough train station or closer to Scarborough, where mixed-use buildings are more common, ask for the strata report early and flag anything unusual with your broker before you go unconditional.

Interest Rate Discounts Are Smaller on High-Rise and Investor-Heavy Buildings

Apartments in buildings over four storeys or with more than 50% investor ownership often receive a smaller rate discount than houses.

The difference might only be 0.10% to 0.20%, but over the life of a loan that adds up. In our experience, buyers don't find out about the rate loading until they receive formal approval, by which point they've already committed to the purchase. Some lenders classify apartments differently depending on the number of units, so a low-rise block of twelve might qualify for the same rate as a house, while a twenty-unit building on the same street does not.

Doubleview itself has mostly low-rise apartments and standalone houses, so many buyers here won't hit these thresholds. But if you're also considering Karrinyup or Scarborough, where larger apartment complexes are more common, the rate loading becomes relevant. Ask your broker to confirm the lender's property classification before you apply, not after.

Houses Offer More Flexibility on Construction and Renovation Lending

If you're planning to renovate or build, a house on its own title gives you access to construction loans and renovation finance that apartments generally don't.

Lenders treat construction and renovation differently depending on whether you own the land outright. With a house, you can borrow against the land value and draw down funds in stages as the work progresses. With an apartment, you're limited to personal loans or refinancing after the work is complete, which usually means paying for renovations upfront.

Consider a buyer looking at an older cottage in Doubleview with plans to extend or renovate. A lender will value the land separately and may lend against the improved value once the work is done, which means you're not carrying the full cost yourself. That same flexibility doesn't exist with an apartment, even if the renovation adds significant value. If your plans involve more than cosmetic updates, the property type shapes what's possible from a lending perspective.

Apartments Have Lower Exit Costs if Your Circumstances Change

Selling an apartment is generally faster and involves lower agent fees and marketing costs than selling a house.

That matters if your circumstances change and you need to refinance, relocate, or access equity quickly. Apartments in Doubleview and nearby suburbs typically settle within 60 to 90 days, and because the buyer pool includes investors and downsizers as well as owner-occupiers, the market stays relatively active even when house sales slow down.

If your home loan includes a portable loan feature, you can take the loan with you when you move, but not all lenders offer portability and not all borrowers qualify. Apartments offer a practical exit if portability isn't an option or if your plans change before you've built significant equity. That's not a reason to choose an apartment over a house, but it's worth considering if your next few years include potential job changes, family growth, or other uncertainties.

The property type you choose shapes your lending options, your upfront costs, and your flexibility down the line. If you're comparing apartments and houses in Doubleview, run the numbers on deposit size, LMI, and interest rate differences before you make an offer. Call one of our team or book an appointment at a time that works for you.

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