Can You Get a Home Loan for a Serviced Apartment?

Getting a Home Loan for a Serviced Apartment

Buying a serviced apartment can be harder to finance than buying a standard apartment.

Some lenders may not accept serviced apartments at all. Others may consider them only at a lower LVR, with stronger borrower evidence, a clean valuation and clear documents showing the property can be sold and used in an acceptable way.

This can be confusing because a serviced apartment may look like a normal unit. It may be in a strong location, have a tenant or operator in place, and produce regular income.

The issue is that lenders often treat serviced apartments as non-standard security.

This guide explains how Australian lenders may assess serviced apartments, hotel-style apartments and managed apartment investments, based on Lateral Loans policy research.

What is a serviced apartment?

A serviced apartment is usually an apartment that is operated with hotel-style or short-stay accommodation services.

It may be part of a managed complex where guests stay for short periods, and the property may be operated by a hotel group, accommodation provider or onsite manager.

A serviced apartment may include:

• hotel-style reception
• cleaning services
• linen services
• short-stay letting
• onsite management
• pooled income arrangements
• fixed management agreements
• restrictions on owner occupation
• restrictions on private letting
• furniture packages
• commercial-style lease arrangements

Some serviced apartments are easier to identify than others. A property may be marketed as an apartment but still have serviced apartment features that affect finance.

Why serviced apartments are harder to finance

Serviced apartments can be harder to finance because they may not be standard residential security.

A lender may be concerned about:

• limited resale market
• management agreement restrictions
• short-stay or hotel-style use
• uncertain rental income
• commercial-style arrangements
• difficulty valuing the property
• restrictions on owner occupation
• restrictions on leasing
• reliance on an operator or manager
• furniture and fit-out arrangements
• whether the apartment can be sold easily

The lender’s main concern is whether the property is marketable and acceptable as security if the loan is not repaid.

Serviced apartment vs standard apartment

A standard apartment is usually used as a normal residential property.

It may be owner-occupied or rented under a normal residential lease.

A serviced apartment is different because its use may be tied to an accommodation business, hotel arrangement or management agreement.

A standard apartment may be easier to finance because:

• it has normal residential use
• it can usually be owner-occupied
• it can usually be leased normally
• the buyer market is broader
• the valuation is more straightforward
• most lenders understand the security

A serviced apartment may be harder because:

• the apartment may not be freely occupied by the owner
• the income may depend on an operator
• there may be short-stay arrangements
• resale may be more limited
• lenders may view it as commercial-style security
• some lenders exclude it under policy

The difference can affect both approval and the maximum amount you can borrow.

Can you get a mortgage for a serviced apartment?

Yes, it may be possible with some lenders, but options are usually limited.

A lender may consider a serviced apartment if:

• the property is acceptable under policy
• the LVR is conservative
• the valuation supports the purchase
• the management agreement is acceptable
• the property is in a strong location
• resale demand is reasonable
• income can be verified
• the borrower has a strong financial position
• the loan purpose fits lender rules

Many lenders may decline serviced apartments regardless of the borrower’s income.

Can you borrow 80% for a serviced apartment?

It may be possible with some lenders, but 80% LVR is not guaranteed.

Serviced apartments often attract lower maximum LVRs than standard apartments.

A lender may cap the loan at a lower LVR because:

• the property is non-standard
• the buyer market is smaller
• mortgage insurer appetite may be limited
• the valuation may be more conservative
• the property may be linked to a management agreement
• the income may be less predictable
• the apartment may be difficult to sell quickly

Some lenders may only consider serviced apartments at conservative LVRs, such as 60% or 70%.

Can you buy a serviced apartment with a 10% deposit?

This can be difficult.

A 10% deposit usually means a 90% LVR loan before purchase costs. Serviced apartments are often not acceptable at that level.

A small-deposit serviced apartment purchase may be harder if:

• lenders mortgage insurance is required
• the lender excludes serviced apartments
• the property is under 50 square metres
• the apartment is tied to a hotel pool
• owner occupation is restricted
• the valuation raises concerns
• rental income is uncertain
• the management agreement is restrictive
• the property has limited comparable sales

A larger deposit may be needed than for a standard residential unit.

Are serviced apartments accepted by mortgage insurers?

This depends on the lender and mortgage insurer.

Where LMI is required, the mortgage insurer also needs to be comfortable with the property.

Serviced apartments may be harder for mortgage insurers because they can be less marketable than standard residential properties.

A mortgage insurer may look at:

• property type
• location
• valuation comments
• buyer demand
• LVR
• management agreement
• occupancy restrictions
• resale restrictions
• rental structure
• borrower strength

If mortgage insurance is not available, the lender may reduce the maximum LVR or decline the application.

Why management agreements matter

The management agreement is one of the most important documents for a serviced apartment.

This agreement may control how the property is leased, managed and used.

A lender may review whether the agreement:

• restricts owner occupation
• restricts private leasing
• requires the property to stay in a hotel pool
• controls rental income
• sets management fees
• limits resale options
• affects the lender’s security
• has a long remaining term
• makes the property less marketable
• gives the operator too much control

A restrictive management agreement can make the property harder to finance.

Can you live in a serviced apartment you buy?

Sometimes, but often there are restrictions.

Some serviced apartments cannot be used as a normal owner-occupied home. Others may allow limited owner stays but not permanent occupation.

Before buying, check whether the property can be:

• owner-occupied
• rented privately
• used only as short-stay accommodation
• used only through an onsite manager
• removed from the managed pool
• occupied for a limited number of days each year

If you want to live in the property, confirm this before signing a contract. A lender may decline the loan if the property cannot be used as intended.

Can you rent out a serviced apartment yourself?

Sometimes, but many serviced apartments have restrictions.

The property may need to stay with an approved manager or hotel operator.

A lender may ask:

• can the owner choose their own tenant?
• can the owner appoint their own property manager?
• is the apartment in a rental pool?
• is short-stay letting required?
• can the management agreement be terminated?
• are there penalties for leaving the arrangement?
• is standard residential leasing allowed?

If you cannot freely rent out the property, the lender may view it as less marketable.

How do lenders assess serviced apartment income?

Serviced apartment income may be assessed differently from normal rent.

A lender may use:

• income shown in tax returns
• statements from the accommodation operator
• net income after management fees
• a rental appraisal
• standard market rent, if applicable
• a reduced percentage of actual income
• no income if it is not acceptable under policy

Serviced apartment income can be more variable than a normal lease, especially where it depends on occupancy rates or short-stay demand.

What if the serviced apartment has a guaranteed rental return?

A guaranteed rental return can sound attractive, but lenders may still assess it carefully.

A lender may ask:

• who provides the guarantee?
• how long does it last?
• what happens when it expires?
• is the guarantee built into the purchase price?
• is the income above market rent?
• is the operator financially strong?
• can the property be rented normally later?
• does the valuation support the guaranteed income?

Some lenders may use a lower rental figure if the guaranteed return is temporary or higher than market rent.

Can serviced apartments be used for investment loans?

Yes, some buyers purchase serviced apartments as investments, but lender options can be limited.

The lender may consider:

• rental income
• operator statements
• management agreement
• property location
• valuation comments
• LVR
• borrower income
• loan purpose
• whether rental income is reliable
• whether the property can be sold easily

A serviced apartment may have regular income, but the lender still needs to accept the property as security.

Can first-home buyers buy serviced apartments?

A first-home buyer may be able to buy a serviced apartment, but it is usually not straightforward.

Serviced apartments may not suit first-home buyers if:

• owner occupation is restricted
• the property is difficult to finance
• the maximum LVR is low
• grants or concessions do not apply
• the buyer has a small deposit
• resale is limited
• the property is treated as non-standard security
• the buyer wants a normal home to live in

First-home buyers should be especially careful if the property looks affordable because it is serviced apartment stock.

Are serviced apartments cheaper than normal apartments?

Sometimes they are cheaper than comparable standard apartments.

The lower price may reflect:

• limited lender options
• restricted owner occupation
• rental pool requirements
• lower resale demand
• higher management fees
• non-standard title or use
• smaller buyer pool
• valuation risk
• investor-only appeal

A lower purchase price can be attractive, but it may also signal that the property is harder to finance or harder to resell.

What if the serviced apartment is under 50 square metres?

This can make finance harder.

A serviced apartment may already be considered non-standard. If it is also small, the lender may see multiple risks.

The property may be harder if it is:

• under 50 square metres
• under 40 square metres internally
• a studio layout
• hotel-style accommodation
• high density
• restricted by management agreements
• not suitable for owner occupation
• in a building dominated by short-stay use

Some lenders may decline the property because of the combination of small size and serviced apartment use.

Related research: Can You Get a Home Loan for a Small Apartment Under 50 Square Metres?

What if the property is advertised as a normal apartment?

Do not rely only on the listing description.

Some serviced apartments are marketed as apartments, hotel apartments, investment apartments or fully managed units.

Before assuming it is standard residential property, check:

• contract of sale
• title details
• management agreement
• rental arrangement
• zoning
• building use
• occupancy restrictions
• strata or owners corporation rules
• valuation comments
• whether the lender sees it as serviced accommodation

The lender’s view matters more than the marketing language.

Can you refinance a serviced apartment?

Refinancing a serviced apartment may be possible with some lenders, but options can be limited.

A lender may review:

• current loan conduct
• property value
• LVR
• serviced apartment status
• management agreement
• rental income
• valuation comments
• borrower income
• loan purpose
• whether cash out is requested

If your current lender accepted the property years ago, another lender may not accept it now. Policy can vary widely.

Can you access equity from a serviced apartment?

Possibly, but cash out may be restricted.

A lender may be cautious about releasing equity against a serviced apartment because the property is non-standard.

The lender may consider:

• current LVR
• valuation result
• purpose of funds
• rental income
• borrower income
• marketability
• management agreement
• whether the property is acceptable security

Equity release may be more realistic at lower LVRs.

What documents do you need for a serviced apartment loan?

A serviced apartment application usually needs more property evidence than a standard unit purchase.

You may need:

• contract of sale
• title details
• strata documents
• management agreement
• lease agreement
• rental pool agreement
• operator income statements
• rental appraisal
• valuation report
• owners corporation documents
• building information
• income documents
• bank statements
• deposit evidence
• legal advice from your conveyancer or solicitor

The lender may need to review the property structure before full approval.

What should your conveyancer check?

A conveyancer or solicitor should review the serviced apartment structure before you commit.

They may check:

• title structure
• zoning
• management agreement
• lease restrictions
• owner-occupation rights
• short-stay rules
• rental pool terms
• termination rights
• fees and charges
• strata or owners corporation obligations
• resale restrictions
• contract conditions

Legal advice is important because serviced apartments can have restrictions that ordinary apartments do not.

Why the valuation is important

The valuation can strongly affect approval.

A valuer may comment on:

• serviced apartment use
• marketability
• comparable sales
• occupancy restrictions
• rental evidence
• management agreement
• building condition
• property size
• location
• buyer demand
• resale risk

If the valuation says the property has limited marketability or is specialised security, the lender may reduce the LVR or decline the loan.

10 common mistakes buyers make with serviced apartments

1. Do not assume a serviced apartment is treated like a normal unit.
2. Do not sign an unconditional contract before checking lender policy.
3. Do not assume the lender will use the advertised rental return.
4. Do not rely only on the agent’s view of financeability.
5. Do not ignore the management agreement.
6. Do not assume you can live in the apartment.
7. Do not assume you can rent it privately.
8. Do not assume 90% or 95% lending is available.
9. Do not forget to check property size.
10. Do not assume a pre-approval means the serviced apartment will be accepted.

How to improve your chances before applying

Before applying for a serviced apartment loan, it helps to gather the property documents early.

Useful steps include:

• confirm whether the property is serviced accommodation
• get the management agreement
• check owner-occupation rights
• check private letting restrictions
• get rental income evidence
• ask for a standard rental appraisal, where relevant
• check the internal apartment size
• review strata or owners corporation documents
• ask your conveyancer to review restrictions
• confirm the likely maximum LVR
• prepare a larger deposit where possible
• compare lender policy before submitting the application

The goal is to confirm the lender will accept the property before you commit.

Should you buy a serviced apartment?

A serviced apartment may suit some investors, but it is not the same as a normal apartment.

It may be worth considering if:

• you understand the management agreement
• the income is realistic
• the location is strong
• the purchase price reflects the risks
• you have a suitable deposit
• you do not need broad lender choice
• resale demand is acceptable
• your adviser and lender are comfortable

It may be less suitable if:

• you want to live in the apartment
• you need high-LVR finance
• you need flexible rental options
• you want easy refinance options
• the management agreement is restrictive
• the income looks too good to be true
• you do not fully understand the structure

A serviced apartment can work for the right buyer, but it needs careful review.

Example scenarios

Scenario 1: Serviced apartment with strong rental history

You are buying a serviced apartment with several years of operator income statements.

The property is in a strong location, but the lender may still cap the LVR because of the serviced apartment structure.

Scenario 2: Buyer wants to live in the apartment

You want to buy a serviced apartment as your first home.

The management agreement does not allow permanent owner occupation.

The lender may decline because the property use does not match the loan purpose.

Scenario 3: Guaranteed rent for two years

The property offers a guaranteed rental return for the first two years.

The lender may assess whether the rent is sustainable after the guarantee ends.

Scenario 4: Small serviced studio

You are buying a serviced studio under 40 square metres.

This may be hard to finance because the property is both small and serviced accommodation.

So, can you get a home loan for a serviced apartment?

Yes, you may be able to get a home loan for a serviced apartment, but lender options are usually limited.

The strongest applications usually have:

• conservative LVR
• suitable deposit
• clear management agreement
• acceptable owner or tenant use
• strong location
• clean valuation comments
• verifiable rental income
• marketable property
• stable borrower income
• a lender whose policy accepts serviced apartments

Serviced apartments can be financed in some situations, but they need to be checked carefully before you sign a contract.

Need help buying a serviced apartment?

Lateral Loans can help compare lenders that may consider serviced apartments, hotel apartments, short-stay accommodation and managed investment apartments.

We can review the property type, management agreement, rental income, LVR, deposit and lender options before you apply.

If you are considering a serviced apartment, speak with a mortgage broker and conveyancer before signing an unconditional contract.