Can I get a loan? 

 Getting a loan for investments is a bit tricky, especially if you need to show that you can handle the negative gearing benefits to afford it. 

Investment loans are riskier than regular home loans, so you need to be in good financial shape to qualify. 

Here are the basics: 

• Have 5%–10% in actual savings. 
• If you borrow more than 90%, some lenders want to see equity in other properties (not your first one). 
• Maintain a good credit history and a high credit score. 
• Stable employment. 

Which banks can help?  

Australian banks see investors who borrow more as high-value clients. However, investment loans are risky for banks. 

For instance, if you have a home loan secured by your home and an investment loan secured by another property, which would you prioritize in financial trouble? 

Banks usually set lower LVRs (lend less as a percentage of your property value) and have stricter lending guidelines for investment loans. 

Find a bank that supports investors, not one with a conservative view on investment loans.  

Different Australian banks and non-bank lenders can consider 95% investment loans.  

Boost your borrowing capacity! To borrow more: 

• Apply with a lender favoring investors. 
• Lower your credit card limits. 
• Apply jointly with your spouse. 
• Invest in positively geared properties. 
• Fix your rate for 3–5 years. 

Banks assess investment property loans differently, affecting your borrowing capacity. 

• Rental income: Some use only 80% of it. 
• Other income: Varies in how they assess overtime, bonuses, etc. 
• Assessment rate: Most add 2% to the current rate. 
• Existing debts: Some assess repayments using principal and interest even if you pay interest only. 

Bank lending policy Is it tough to get a mortgage for an investment property?  

Not necessarily. Though it might seem tricky, it’s possible. Some things to remember: 

• For over 90%, most lenders accept equity in your home. 
• Avoid common investor mistakes. 
• Borrowing power can be a challenge; we know lenders with generous calculations. 
•  If you own multiple properties, consider a multi-lender strategy to get the most favorable terms.

Are all properties acceptable?  

Not every property is accepted by banks. Generally, it should be: 

• A standard unit, house, townhouse, or land and construction. 
• Over 50m² living area. 
• In good condition. 
• In a high-demand location (major city or town with more than 10,000 people). 

What can I use the loan for?

All legal investment purposes are accepted: 

• Property. 
• Shares. 
• Managed funds. 
• Options. 
• Business. 

Is this loan for me?

It’s for anyone wanting to borrow to invest, typically professionals with high incomes. 

Borrowing 95% for an investment property suits those in strong financial positions, knowledgeable about property investment, or experienced in building portfolios. 

Not for those with poor credit history; investment loans are costly, and returns may suffer. 

What’s the max interest-only term? The max in Australia is 15 years. Most allow 5 years, a few 10 years, and only two 15 years. 

Many prefer interest-only to manage monthly cash flow and allocate money for new investments or lifestyle. 

Did you know some lenders allow 95% borrowing for a new investment property, covering mortgage insurance? It’s high risk, so strong finances are a must. Some may need principal and interest payments until under 90%. 

90% investment loans. 

 Borrowing 90% is lower risk, making approval easier. Most allow interest-only repayments with lower LMI costs. 

Capitalizing LMI to 97% Some mortgage insurers limit loans to 95%, including LMI. However, certain lenders can go up to 97% including LMI. 

What is negative gearing?  

It’s when your investment costs (interest and running costs) exceed your investment income, resulting in a loss. The goal is long-term gains, and the net loss can be tax-deductible against other income. 

Advantages of investing in property  

Property investment offers security, potential for higher returns, constant rental income, growth, tax reductions, and an asset base for increased borrowing capacity. 

Disadvantages include high initial and ongoing costs, poor liquidity, vacancies, and risks. 

Costs associated with investing in property  

Initial costs include valuations, stamp duty, legal fees, and transferring property title. Ongoing costs cover rates, maintenance, levies, insurance, interest, and agent fees. 

Consider all costs before investing, and plan with a budget discussed with a financial planner. 

Why property investment? 

 Property investments offer leveraged returns, potential tax benefits, and higher borrowing capacities. It’s a common choice for extra passive income. 

You can release equity for other investments like shares or business. A secured investment loan is cheaper than a margin loan, and banks prefer residential security.