When you're looking to apply for a home loan, one of the most important factors lenders consider is the type of property you want to purchase. Not all properties are treated equally when it comes to home loan products, and understanding these differences can help you secure the right home loan package for your situation.
At Blank Financial, we help clients in Mount Eliza and across Australia access home loan options from banks and lenders across Australia, no matter what type of property they're interested in purchasing.
Standard Residential Properties
Standard houses and apartments are typically the most straightforward when it comes to home loan applications. These properties usually attract the most favourable interest rate and the widest range of home loan features.
For owner occupied home loan purposes, lenders generally offer:
- Variable rate options with flexible repayment features
- Fixed rate terms ranging from one to five years
- Split rate solutions combining both variable and fixed portions
- Principal and interest or interest only repayment structures
- Access to an offset account or linked offset facility
With standard residential properties, you'll typically find it easier to compare rates and secure attractive interest rate discounts. The loan to value ratio (LVR) requirements are also more flexible, with some lenders offering up to 95% LVR (though you'll need to pay Lenders Mortgage Insurance (LMI) above 80% LVR).
Apartments and Units
While apartments and units are common property types, lenders do have specific criteria. Properties in buildings with more than six storeys may face additional scrutiny, and some lenders have restrictions on studio apartments or properties smaller than 50 square metres.
The current home loan rates for apartments are generally similar to houses, though you may find:
- Some lenders require a larger deposit
- Certain high-density developments may be excluded
- Properties in buildings with significant commercial space may have limited options
If you're considering purchasing an apartment, it's worth speaking with a mortgage broker who can help you find lenders that specialise in this property type and offer suitable home loan benefits.
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Book a chat with a Finance & Mortgage Broker at Blank Financial today.
Rural and Semi-Rural Properties
Properties on larger land holdings or in rural areas can be wonderful investments, but they often require specialist home loan products. Lenders typically classify properties as rural if they're on more than two hectares or have primary production potential.
For rural properties, you might experience:
- Higher interest rates compared to metropolitan properties
- Lower maximum LVR (often 80% maximum)
- More detailed property valuations required
- Some lenders may not offer certain home loan features like mortgage offset accounts
Despite these considerations, many lenders do offer competitive variable home loan rates and fixed interest rate home loan options for rural properties. The key is finding the right lender for your specific situation.
Townhouses and Duplexes
Townhouses and duplexes generally fall into a similar category as standard houses when it comes to home loan options. Most lenders treat these properties favourably, offering:
- Competitive variable interest rate and fixed interest rate options
- Full access to home loan packages with additional features
- Standard LVR requirements up to 95%
- Both principal and interest and interest only loan structures
These property types can be excellent for those looking to invest in property or achieve home ownership while building equity over time.
Unique and Non-Standard Properties
Some properties require special consideration, including:
- Properties with serviced apartments or short-term rental restrictions
- Houses constructed with non-standard materials
- Properties on leasehold land
- Company title apartments
- Properties with significant commercial components
These property types often have:
- Limited lender options
- Higher interest rates
- Lower maximum LVR ratios
- Fewer home loan features available
- More stringent home loan pre-approval requirements
When calculating home loan repayments for these properties, it's important to factor in potentially higher interest rates and the possibility that you'll need a larger deposit.
Investment Properties
If you're looking to invest in property rather than occupy it yourself, the property type becomes even more important. Investment properties can be structured with either principal and interest or interest only repayments, depending on your strategy to improve borrowing capacity and build equity.
Many investors choose a split loan structure, combining:
- A fixed interest rate home loan portion for budgeting certainty
- A variable rate portion for flexibility and potential rate discount benefits
- An offset account linked to the variable portion to reduce interest charges
Some lenders also offer portable loan features, allowing you to transfer your loan amount to a different property if you decide to change your investment.
Finding the Right Home Loan for Your Property Type
Regardless of the property type you're interested in, working with an experienced mortgage broker gives you access to a comprehensive home loan rates comparison across multiple lenders. This helps ensure you:
- Secure appropriate loan products for your property type
- Obtain the lowest rates available for your situation
- Access suitable home loan features for your needs
- Understand your options for principal and interest versus interest only
- Find solutions that support your financial stability and secure future
At Blank Financial, we specialise in matching clients with the right home loan for their specific property type and circumstances. Whether you're a first home buyer looking at an apartment in Mount Eliza, considering investment loans for a rural property, or exploring refinancing options for your current home, we can help you compare rates and find suitable home loan application pathways.
We work with a panel of lenders across Australia to help you access home loan products that match your property type, whether you need lower repayments, want to build equity, or are looking to improve your borrowing capacity for future purchases.
Understanding how property types affect your borrowing capacity is just one part of the puzzle. Our team can also assist with calculating home loan repayments, discussing the benefits of different loan structures, and explaining how features like linked offset accounts can help you pay off your loan sooner.
Call one of our team or book an appointment at a time that works for you to discuss your property purchase plans and explore the home loan options available to you.
