Apartment size / financing

Is the garage included in the apartment size measurement, in regards to obtaining financing (when lenders set min sizes like greater than 50sqm for example)?

And secondly, how do car ports or car spaces fit into all this? Are they treated the same as a fully enclosed garage?

 

Same as above. Only living area included in lender's minimum size. Some may also exclude balcony

 

The clue is 'living' area.

There are a couple of big four lenders that don't have size restrictions, but do have lvr restrictions on property's less than 40-50sqm.

 

Ask yourself if investing in a property with less than 50sqm is really a good investment regardless of car space. I can show you small apartments in inner Melbourne suburbs that haven't moved in value in over 6 years, despite most of Melbourne doubling in value in that time. There is a reason lenders are reluctant to lend against small apartments.

 

NAB include it in their 50 sq. area requirement, but most don't.
For smaller units, CBA do 80% lends.

Smaller units typically have lower growth rates - IMO its also partly a supply side factor (these are relatively easy to build in high rise density areas), rather than only demand side restrictions.

Nonetheless, a blanket 'its a bad investment' doesn't necessarily hold for some investor profiles. For most property investors with limited pools of capital and borrowing power, i'd definitely consider alternative options with capital upside. Thats usually the play to earning longer term returns and achieving property related goals.

For mature borrowers looking to source additional, relatively low risk income investments, it can certainly be a good play. In some cases, the yield alone can make the investments worthwhile, in pockets you can get 10%+, and relatively high net yields too, which makes it relatively attractive for borrowers looking for income vehicles and are quite happy with limited capital upside.

 

Different rules for different lenders. Some lenders will definitely take it in their policy whilst others rely solely on the internal living space ignoring balconies, car parks, storage allocations etc.

When comparing the investment - consider that if 75% of lenders won't touch the property then how that will impact the growth and desirability of the property in the future. As a rule of thumb:

Apartment sizing
50sqm+: lots of lender options
40-50sqm: reasonable number of lenders - but quite a few mainstream lenders will not touch them
<40sqm: very few lenders and LVR restrictions - be very very very careful in justifying this as an investment.