Investment Loans Australia

Most lenders prefer a 20% deposit for an investment property. Lenders generally want a larger deposit for investment purchases than for an owner-occupied home. Some lenders may go up to 95% of the property value with LMI, but most cap investment loans at 80%. Your deposit can sometimes come from equity in another property instead of cash. We’ll check what each lender accepts for your situation.

It depends on your income, living expenses, existing debts, the expected rent and your deposit. Lenders compare your salary, rental income and other earnings against your living costs and debt repayments, including any existing mortgages. Each lender assesses these differently, so borrowing power can vary. We’ll work out your range before you start looking, and show you ways to improve it.

Often, yes. Equity is the difference between your home’s value and what you owe on it. Many investors use it for the deposit and costs, usually by borrowing against their existing property or by restructuring their loans. It increases your total debt and ties the properties together in different ways depending on the structure, so it’s important to set it up carefully. We’ll walk you through the options and the risks.

With principal and interest (P&I), each repayment pays down some of the loan as well as the interest. With interest-only, you pay just the interest for a set period, which keeps repayments lower but doesn’t reduce the loan balance. Interest-only is more common for investors who want to maximise cash flow, but it leaves a higher loan balance at the end of the period. After the interest-only period ends, the loan usually converts to P&I unless you refinance into a new interest-only term. Tax treatment depends on your circumstances, so speak with your accountant.

Usually, yes. Lenders consider investor loans riskier, so investment rates are typically higher. The gap varies by lender, product and market conditions, and it changes over time. Comparing rates across multiple lenders, along with fees and features, can make a real difference.

Lenders don’t count 100% of the rent. They typically count only 80% to 90% of the stated rental income, to allow for vacancies, maintenance costs and arrears. Some lenders use a lower figure. They usually want evidence, such as a rental appraisal from a property manager or a current lease. Because policies differ, the same property can give you different borrowing power at different lenders.

Lenders mortgage insurance is generally needed when your loan is above 80% of the property’s value. Waivers that let some owner-occupiers borrow past 80% without LMI are commonly restricted or unavailable on investment loans. LMI is a one-off cost that protects the lender, not you, and it is often added to the loan. We’ll show you the costs and the alternatives, such as a larger deposit or using equity.

There’s no fixed number. What matters is whether your income, rental income, existing debts and equity still pass each lender’s serviceability test as your portfolio grows. Existing investment debt is typically assessed under stress. How your loans are structured, and which lenders you use, can make a big difference to how far you can go. We plan with your longer-term goals in mind, not just the next purchase.

PFGA explains how we’re paid, and any fees that may apply, before you proceed, so there are no surprises. For most home and investment loans, we’re paid by the lender after your loan settles. To talk through your situation, call us on 1800 574 055 or book an appointment.