To some a serviced apartment is a good investment, however from a lending perspective they can be very difficult, that’s why having an experienced mortgage broker involved can help you avoid any delays or surprises.

Serviced apartments appeal to some buyers for their fixed rental income, no vacancies and long leases.  However, for a number of reasons, mainly due to management agreements in place, most lenders are cautious when lending for the purpose of a service apartment.  As a result, usual interest rates may be higher and the loan to value ratio may be lower that what otherwise would be offered for a standard residential property.

We always suggest that having a pre-approval in place and knowing all the details of your loan prior to exploring serviced apartments is the best way forward.

In this particular case study, the client had owned his serviced apartment for a few years and wanted to see if he could get a better rate.  Given the particular management agreement in place, many lenders did not want to touch the loan, or if they did, their offering did not put the client in a better position.  We were able to talk to his current lender and not only did we bring the rate down to normal residential rates, but also applied a .25% discount on their current rate.  As a result the client is saving hundreds per month and is able to use those funds to pay down his non-deductible debt.

So if you are interested in exploring the idea of buying a serviced apartment or refinancing the loan on your serviced apartment we encourage you to do your homework and to talk to us about likely loan scenarios to help you get the full picture.