Investment property loans, structured for the portfolio.
Investment lending is rarely just about the rate. The structure determines deductibility, future flexibility, and whether the next purchase is easy or hard.
Six things that decide the structure.
We walk through each of these before recommending a lender or a product. Headline rate is the last consideration, not the first. The investment loan estimator gives a Year-1 cashflow read once you know roughly what you'll borrow.
Interest-only structure
Lower repayments during the IO period, deductible interest stays high. Most lenders cap IO at 5 years before it reverts to P&I.
Principal and interest
Repayments are higher but the balance is reducing. Cheaper rate than IO at most lenders. Often the right call later in a portfolio.
LVR and cross-collateralisation
How the security is structured affects how easily you can refinance, sell, or buy the next property. Usually best kept stand-alone.
Offset on investment loans
Available on most variable investment products. Useful for storing cash without paying down the deductible balance.
Negative gearing position
If holding costs exceed rental income, the shortfall is generally deductible. Cash flow still needs to work, not just the tax position.
Debt recycling
Converting non-deductible home loan debt into deductible investment debt over time. Requires a clean structure and accountant in the loop.
Tax, cash flow, and lender policy.
Three lenses on the same purchase. Most brokers run one. We run all three and pull the financial planner in if the call is close. The property investment hub shows how the broking, planning and buyer's agent sides usually slot together on a portfolio purchase.
- 01Tax structure
Personal name, joint, company, or trust. Each has implications for negative gearing, CGT discount, and lender choice.
- 02Cash flow read
Will the holding cost work with current rates plus a 2% buffer? We model the position not just on day one but year three.
- 03Deductibility hygiene
Investment funds in an investment loan. Non-deductible funds in a separate split. The accountant will thank you.
- 04Lender policy fit
Investor LVR, postcode policy, rental income treatment, exposure limits. Different lenders, different answers.
Panel and credentials.
- Panel size
- 50+ lenders via Outsource Financial
- Typical investment LVR
- 80% without LMI, up to 90% with LMI
- Typical loan size
- $500K to $800K
- Cross-pillar
- Financial Planning and Buyer's Agent under one roof
- Practitioner
- Balki Balakrishnan, FBAA
- Authorisation
- CR 45250 of Outsource Financial
This is general credit information. For tax advice we work with your accountant. See the Credit Guide for credit disclosures.
Investment lending, plain answers.
Interest-only suits investors with non-deductible debt elsewhere (a home loan) because it preserves the deductible balance. P&I suits portfolios where the home loan is gone or cash flow needs the lower rate. The right answer depends on your full picture.
Most lenders go to 80% LVR without LMI for investment. Some will go to 90% with LMI. The higher the LVR, the tighter the policy and the higher the rate. Investment rates also sit a touch above owner-occupied at most lenders.
Yes, this is the most common approach. We restructure the existing home loan with an equity release (split) that becomes the deposit and costs for the investment. Kept deliberately separate so the deductibility is clean.
Yes, but most lenders only count 70% to 80% of gross rent for serviceability. They want to see a rental appraisal or, ideally, an existing lease. Negative gearing benefits are sometimes added back to income, depending on the lender.
Trusts can help with asset protection and income flexibility, but they don't always access negative gearing the same way and the lender panel is smaller. This is a financial planner and accountant conversation. We can sit in.
Yes. Portfolio review, sequencing the next purchase, refinancing existing investment debt, and keeping the security structure clean. See the Finance Broking pillar for the full service.
Continue reading
- Home loansOwner-occupied lending and how it pairs with investment debt.
- RefinancingRefinancing investment loans and equity release.
- Commercial property loansWhen the next purchase is commercial, not residential.
- SMSF lendingInvestment property held inside super.
- Finance BrokingThe pillar page covering the full broking service.
- Investment loan calculatorYear-1 cashflow, gross yield and indicative tax position.
- Buyer's agent for investmentSuburb research, yield, off-market sourcing.
Buy the next one without breaking the last one.
A 30-minute call gets you a portfolio read, capacity figure, and a structure recommendation. Free, no paperwork to start.