With a house, the lender mostly looks at you and the land. With a unit, they look at you, the unit and the building around it. That third part catches a lot of buyers out, especially around North Sydney, Artarmon, Chatswood and Crows Nest, where a big share of what's for sale is in a block of apartments.

None of this means units are hard to finance. It means the lender list shrinks or grows depending on the building, and it is much better to find that out before you sign a contract than after.

The size of the unit

Many lenders set a minimum internal floor area. Studios and very small one-bedroom units are the usual casualties. A unit that is lovely to live in can fall under the line, and then fewer lenders will lend against it, or they will want a bigger deposit.

The size and make-up of the building

Some lenders are uneasy about large complexes, or buildings where lots of the units are owned by investors rather than people living in them. Others look at how many units sit in the one postcode. Policies differ a lot from lender to lender, and they change, so the same building can be fine for one and a no for another.

Serviced apartments, student housing and unusual layouts

Anything that is not a plain residential unit gets treated differently. Serviced apartments, student accommodation, hotel-style rooms and units with restricted titles can all sit under tighter rules, with smaller maximum loan-to-value ratios. If the listing mentions a management rights arrangement or a hotel pool, ask early.

The valuation

The lender orders a valuation of their own. In a block where several similar units have sold recently, that is usually straightforward. In a boutique block, or one where few units trade, the valuer has fewer sales to compare, and the number can come in under the price you agreed. Have a plan for what you do if it does: more deposit, a different lender or a renegotiated price.

The strata report

Before you buy, a strata report tells you about levies, the sinking fund, special levies planned, and any building defects or legal disputes. It is worth paying a solicitor or conveyancer to read it properly. Lenders can also care about what is in it, particularly if there's a cladding or structural issue on the horizon.

  • Levies. Higher strata levies reduce what you can borrow, because lenders count them as a living cost for investors and owner-occupiers alike.
  • Sinking fund. A thin fund and big works coming up often means a special levy. Better to know before you commit.
  • Defects and disputes. An open dispute or a known defect can make a lender nervous about the security.

Buying off the plan

If the building isn't finished yet, the loan you are approved for at signing may not be the loan available at settlement, sometimes years later. Valuations are redone at completion, your own finances may have shifted, and lender policy may have moved. Keep some buffer and check in with your broker before the building is complete, not on the week of settlement.

What to do before you make an offer

  • Get your pre-approval in place first. Our guide to pre-approval explains what it does and does not guarantee.
  • Send your broker the address or the listing before you inspect. A quick check against lender policy takes little time and can save a lot of grief.
  • Know your deposit position. A smaller deposit can add lenders mortgage insurance to the cost.
  • Read the strata report, or have someone read it for you, before the cooling-off period or exchange date runs out.

If you are looking at a unit and want to know how it would stack up, get in touch or call 1300 001 755. We are licensed credit advisers based in Forestville, and we work with buyers across the North Shore and Northern Beaches. Our pages for North Sydney, Artarmon and Chatswood cover what we see most often in each suburb.

Frequently asked questions

Is it harder to get a home loan for a unit than a house?

Not always, but there are extra checks. Lenders look at the size of the unit, the building and the valuation as well as your finances, so the list of lenders willing to fund it can be shorter.

Why would a lender refuse a unit?

Common reasons include a very small floor area, a large complex, a high share of investor-owned units, or a building with defects or disputes. It differs between lenders.

Do strata levies affect how much I can borrow?

Yes. Lenders usually treat levies as an ongoing cost when they assess your capacity to repay, so higher levies can lower your borrowing power.

Should I get pre-approval before buying a unit?

It helps, but it is not a guarantee. The lender still values the specific unit and checks the building before final approval.

General information only. It does not take your objectives, financial situation or needs into account, and it is not credit or financial advice. Lender policy, rates and eligibility change regularly and vary between lenders — talk to us about your own circumstances before acting on anything here.