G'day tradies! Thinking about buying a unit, townhouse, or apartment? You'll be dealing with what's called a strata title property. While the application process might seem different from buying a standalone house, getting a home loan for strata properties is absolutely doable when you know what you're doing.
What Is a Strata Title Property?
A strata title property means you own your individual unit or apartment, plus a share in the common areas like gardens, driveways, and building facilities. Think of it as owning your slice of the pie while sharing the crust with your neighbours.
Strata properties include:
• Apartments and units
• Townhouses in complexes
• Villas in gated communities
• Some commercial properties with shared facilities
How Lenders View Strata Properties
When you're applying for a home loan on a strata property, lenders look at a few extra factors beyond your financial situation and borrowing capacity. They want to know the building is well-managed and financially sound.
Lenders will check:
• The strata plan and building condition
• Body corporate financial records
• Any upcoming major works or levies
• The loan to value ratio (LVR) you're seeking
• Your income stability as a tradie
Interest Rates and Loan Options
The good news is that interest rates for strata properties are typically the same as for houses. You'll still access home loan options from banks and lenders across Australia, including both variable interest rate and fixed interest rate products.
Your options include:
• Variable home loan rates that move with market conditions
• Fixed interest rate home loan products for rate certainty
• Split loans combining both rate types
• Interest-only periods if they suit your situation
Many lenders offer interest rate discounts for tradies, especially if you have a solid income history and good relationship with your bank.
Ready to get started?
Book a chat with a Finance & Mortgage Brokers at Tradie Home Loans today.
Understanding Loan to Value Ratios
Your LVR affects whether you'll need lenders mortgage insurance (LMI). For strata properties, some lenders are more cautious about high LVR loans, particularly in apartment buildings with many units.
If your loan amount exceeds 80% of the property value, you'll likely pay LMI. However, this shouldn't stop you from buying a home if your borrowing capacity supports the repayments.
The Application Process for Strata Properties
When you apply for a home loan on a strata property, the streamlined application process includes standard documentation like bank statements and income verification, plus some strata-specific paperwork.
You'll need:
• Standard home loan application documents
• Strata plan and building plans
• Recent body corporate meeting minutes
• Financial statements from the body corporate
• Details of any special levies or upcoming works
Getting pre-approved through home loan pre-approval helps you understand your budget before you start looking at properties.
Calculating Home Loan Repayments
When calculating home loan repayments for strata properties, remember to factor in ongoing strata fees. These quarterly or monthly payments cover building maintenance, insurance, and shared facility upkeep.
Your total housing costs include:
• Principal and interest repayments
• Strata levies
• Council rates
• Your own building insurance (contents)
• Stamp duty (one-off cost)
Many tradies find an offset account helps reduce the interest paid over the loan term, as your everyday banking balance offsets against your home loan balance.
Special Considerations for Tradies
As someone in the trades, you might have variable income or be self-employed. This doesn't disqualify you from buying a strata property, but it does mean your home loan application needs to clearly demonstrate your earning capacity.
Lenders want to see:
• Consistent income over recent years
• Good cash flow management
• Solid bank statements showing regular deposits
• ABN and business registration details if self-employed
Using Home Equity and Property Market Timing
If you already own property, you might use your existing home equity to help fund your strata purchase. This can reduce the loan amount needed and potentially avoid LMI.
The property market for strata titles can move differently than the house market, so timing your purchase based on your personal circumstances rather than trying to pick market peaks makes more sense.
Making Your Move
Buying a strata title property can be a smart move for tradies, offering lower maintenance responsibilities and often more affordable entry points into desirable locations. With the right preparation and understanding of home loan rates and requirements, you'll be well-positioned to secure the financing you need.
Remember, every lender has different criteria for strata properties, so having access to multiple lenders gives you more options and potentially better home loan interest rates.
Ready to explore your home loan options for a strata property? Call one of our team or book an appointment at a time that works for you.
