Avoid These 5 Mistakes When Buying Your First Apartment

Buying your first apartment can feel overwhelming, especially when you're serving in the Australian Defence Force and may be stationed anywhere across the country. Whether you're looking at a modern unit in Brisbane or a heritage apartment in Melbourne, understanding the ins and outs of apartment purchases will help you make informed decisions.

As a Defence Force member, you have access to home loan options from banks and lenders across Australia that recognise your unique employment situation. However, apartment purchases come with specific considerations that differ from buying a house.

Understanding Your Borrowing Capacity for Apartments

When applying for a home loan to purchase an apartment, lenders assess your financial situation differently than they would for a house purchase. Your borrowing capacity depends on several factors:

• Your current income and employment stability (Defence Force employment is viewed favourably by most lenders)
• Existing debts and financial commitments
• The apartment's loan to value ratio (LVR)
• Body corporate fees and council rates specific to apartment living

Lenders mortgage insurance (LMI) may still apply if your loan amount exceeds 80% of the apartment's value. However, some lenders offer interest rate discounts for Defence Force members that can help offset these costs.

Key Differences in the Application Process

The home loan application process for apartments involves additional documentation compared to house purchases. You'll need to provide:

1. Standard bank statements and income verification
2. Body corporate records and financial statements
3. Building inspection reports focusing on common areas
4. Strata management details and future levy projections

Many lenders now offer a streamlined application process for Defence Force members, recognising the reliability of military income and employment.

Interest Rate Options for Apartment Purchases

When buying an apartment, you'll encounter the same interest rate options as other property types:

Fixed Interest Rate Home Loans: Lock in your home loan interest rate for a set period, providing certainty for your repayments regardless of property market fluctuations.

Variable Home Loan Rates: Your interest rate moves with market conditions, potentially offering savings when rates decrease.

Many Defence Force members choose a combination of both, splitting their loan amount between fixed and variable portions to balance security and flexibility.

Calculating Home Loan Repayments and Additional Costs

Calculating home loan repayments for apartments requires factoring in ongoing strata costs. These include:

• Quarterly body corporate levies
• Special levies for building maintenance
• Insurance premiums (though building insurance is typically covered by body corporate)
• Council rates and water charges

These additional costs affect your overall budget and should be considered when determining your comfortable loan amount.

Getting Pre-Approved and Building Home Equity

Home loan pre-approval gives you confidence when making offers on apartments. Pre-approval shows sellers you're a serious buyer with confirmed borrowing capacity.

Once you purchase your apartment, consider setting up an offset account linked to your home loan. This account can help reduce interest charges while maintaining access to your funds – particularly useful for Defence Force members who may face unexpected postings or deployments.

Making the Most of Your Property Investment

Apartments can be excellent investments for Defence Force members, especially if you're frequently relocated. They often require lower maintenance than houses and can provide rental income when you're posted elsewhere.

Consider apartments in areas with:

• Strong rental demand
• Good transport links
• Proximity to Defence bases or major employment centres
• Established infrastructure and amenities

Your home equity in the apartment can also serve as a stepping stone to future property purchases as your career progresses.

Working with Specialist Defence Mortgage Brokers

Defence-focused mortgage brokers understand the unique challenges military personnel face when buying property. They can help you access home loan options that accommodate deployment schedules, varying income during training periods, and the potential for interstate transfers.

Specialist brokers also understand how different lenders view Defence Force employment and can direct you toward those offering the most favourable terms for your situation.

Purchasing an apartment as a Defence Force member doesn't have to be complicated when you understand the process and work with professionals who understand your unique circumstances.

Call one of our team or book an appointment at a time that works for you to discuss your apartment purchase options and find the right home loan solution for your Defence Force career.