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Build Invest GrowDaniel Kotevski

Investment Loans — Grow Your Property Portfolio

Whether you are buying your first investment property or adding to an existing portfolio, having the right loan structure makes a real difference to your returns.

How Investment Loans Work

Investment loans work similarly to home loans, but lenders assess them differently. Interest rates are usually slightly higher, deposit requirements are stricter, and lenders look closely at the expected rental income alongside your personal earnings.

The upside is that the interest on an investment loan is generally tax-deductible, and the right loan structure can improve your cash flow and long-term returns. Getting this right from the start is crucial.

Negative Gearing Basics

Negative gearing is when your property costs more to hold than it earns in rent. The shortfall can be claimed as a tax deduction, effectively reducing your taxable income. Many Australian investors use this strategy, particularly in the early years of ownership.

However, negative gearing is not a strategy on its own — it only works if the property grows in value over time. We help you understand the real numbers, not just the tax benefits, so your investment decisions are grounded in reality.

Understanding Rental Yield

Rental yield is the annual rental income expressed as a percentage of the property's value. Gross yield is the simple calculation before expenses, while net yield accounts for costs like management fees, insurance, council rates, and maintenance.

A higher yield means better cash flow, but it does not always mean a better investment. Properties in high-growth areas often have lower yields but stronger capital appreciation. We help you assess both sides when structuring your finance.

Interest-Only vs Principal & Interest

Interest-only (IO) repayments keep your cash outlay lower by only covering the interest portion of the loan. This is popular with investors who want to maximise cash flow and tax deductions. IO periods typically last 1 to 5 years before reverting to principal and interest.

Principal and interest (P&I) repayments are higher month to month, but you steadily reduce the loan balance and pay less interest over the life of the loan. The right choice depends on your investment strategy, cash flow needs, and long-term goals.

Borrowing Capacity for Investors

Your borrowing capacity as an investor depends on your income, existing debts, living expenses, and the expected rental income of the new property. Lenders also factor in all your current loan commitments, including credit cards (at their full limit, even if unused).

Different lenders calculate borrowing capacity in different ways, and the gap between the most and least generous can be hundreds of thousands of dollars. We know which lenders suit investors and how to present your application to maximise your capacity.

How We Help You Invest

A clear process built around your investment goals.

1

Understand Your Goals

We discuss your investment strategy — whether you are buying your first investment property or expanding a portfolio.

2

Assess Borrowing Capacity

We calculate how much you can borrow, factoring in rental income, existing loans, and tax implications.

3

Structure Your Loan

We recommend the right loan type, repayment structure, and lender to align with your investment goals.

4

Settle and Start Growing

We manage the process through to settlement so you can focus on growing your portfolio.

Investment Loan FAQs

Most lenders require a minimum 10% deposit for investment properties, though 20% is ideal to avoid Lenders Mortgage Insurance. Some lenders will accept 5% in certain circumstances, but the rates and fees are less competitive. If you have equity in an existing property, you may be able to use that as your deposit instead of cash savings.
Negative gearing occurs when the costs of owning your investment property (loan interest, maintenance, management fees, insurance) exceed the rental income it generates. The resulting loss can be claimed as a tax deduction against your other income, reducing your overall tax bill. It is a common strategy but not the only one — we help you understand whether it makes sense for your situation.
Interest-only repayments are lower in the short term, which can improve your cash flow and maximise tax deductions. However, you are not paying down the loan balance. Principal and interest repayments build equity faster and cost less in total interest over the life of the loan. The right choice depends on your cash flow, tax position, and investment strategy.
Yes. If your home has increased in value since you bought it, you may have usable equity that can serve as a deposit for an investment property. Lenders typically let you access equity up to 80% of your home's current value (minus what you still owe). We arrange a valuation and calculate exactly how much equity you have available.
Lenders use rental income to help service an investment loan, but they typically only count 70% to 80% of the expected rent to account for vacancies and expenses. This means a property with $500 per week rent might only add $350 to $400 per week to your assessed income. We know which lenders are more generous with rental income calculations.
This depends on your personal circumstances, tax position, and asset protection needs. Buying in your own name is simpler and gives you access to the capital gains tax discount. A trust offers asset protection and income distribution flexibility but comes with higher setup and ongoing costs. We recommend speaking to your accountant about the ownership structure before we arrange finance.

Ready to grow your property portfolio?

Book a free consultation and we will help you find the right loan structure for your next investment.

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