Buying an apartment sure has it’s attractions. They’re generally well located in the centre of a city which makes them handy to work, entertainment and shopping. The other beauty is that there aren’t any lawns to mow or gardens to take care of. Plus they have security features and privacy a regular house doesn’t always have.

And then there’s the price! As a prospective first home buyer you won’t have failed to notice how much cheaper an apartment is relative to a standard house in a similar location or on the city fringe. So when you hear banks like Westpac and ASB are lending 95% of the purchase price, an apartment seems immediately within your reach. All of a sudden that $15,000 you’ve saved up is a deposit on a pretty cool apartment. Or is it?

At the time of writing banks will usually require you to have a minimum deposit of 20% to buy an apartment mainly due to the historic volatility of apartment prices. By requiring a minimum of 20% deposit, banks give themselves a margin of safety should anything go wrong. So it’s totally true you don’t need a 5% deposit to buy an apartment…the reality is you actually need a bit more.

But fear not, this shouldn’t mean the end of your property search or home ownership aspirations. Maybe a change of tack is required (remember banks are keen to lend 95% on a regular house in most of the cities) or a little more time to save a bit more. Why not call us to discuss your options?

About Campbell Hastie

Cam is one half of Auckland based mortgage brokers, The Go 2 Guys.

He makes a living by sharing what he knows about mortgages with people, arranging mortgages for people and then insuring people.

He doesn't claim to know everything about mortgages himself which is why he teamed up with David Mercer — hence the ‘2’ in Go 2 Guys.

He writes posts regularly on his blog and has been told he has an ability to share his knowledge in a simple and sometimes memorable way.

Feel free to comment and ask any questions. Contact Campbell Hastie m: 027 697 7789.

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