Question 1

How is borrowing for an investment property different to buying a home?

Accepted Answer

Several key differences apply:  • Interest rate: Investment loan rates are typically 0.1–0.6% higher than owner-occupied rates • Deposit: Most lenders require 10–20% deposit for investment loans (vs. 5% with schemes for owner-occupied) • Serviceability: Lenders apply a higher assessment rate buffer and may discount rental income (typically 70–80% of gross rent is counted) • IO availability: Interest-only periods are available for investment loans and are a common strategy • Tax deductibility: Interest on investment loans is generally tax-deductible; interest on owner-occupied loans is not

Question 2

How much deposit do I need for an investment property?

Accepted Answer

For most investment property purchases, you'll need:  • 10% deposit (90% LVR) with LMI, available at some lenders • 20% deposit (80% LVR), most common threshold to avoid LMI • 10% deposit, no LMI if you qualify for a professional LMI waiver  Alternatively, you can use equity in your existing home as a deposit, effectively borrowing 100% of the investment property purchase price, secured across both properties.  Note: Your cash deposit should also cover stamp duty, conveyancing costs and any building/pest inspection fees.

Question 3

What is negative gearing and how does it help investors?

Accepted Answer

Negative gearing occurs when your investment property expenses (interest, rates, insurance, maintenance, depreciation) exceed your rental income.  The resulting loss can be offset against your other income (such as your salary), reducing your taxable income and tax liability. This is a common strategy for Australian property investors in higher tax brackets.  Example: • Rental income: $30,000 per year • Loan interest + expenses: $42,000 per year • Negative gearing loss: $12,000 • Tax savings (at 37% marginal rate): $4,440 per year  Negative gearing is not a goal in itself, the net benefit depends on capital growth, your tax situation and holding period. Always obtain independent tax advice.

Question 4

Should I use interest-only or principal & interest for my investment loan?

Accepted Answer

Both have their place:  Interest-Only (IO): • Lower repayments in the short term • Maximises cash flow for other investments • IO period = 1–5 years (APRA regulated); reverts to P&I after • The loan balance doesn't reduce during IO period • Interest is fully tax-deductible on investment properties  Principal & Interest (P&I): • Faster equity build-up • Lower total interest paid over loan life • Slightly lower rates than IO at most lenders • Better for long-term debt reduction strategy  Many investors use IO in the early accumulation phase and switch to P&I once yield improves or portfolio growth is achieved. Speak with your accountant and broker together.

Question 5

Can I use equity in my home to buy an investment property?

Accepted Answer

Yes, this is one of the most common property investment strategies in Australia.  How it works: 1. Your home is valued (lender obtains a formal valuation) 2. Available equity = Property value × 80% − outstanding loan balance 3. This equity can be accessed as a separate investment loan or via a redraw/line of credit  Example: • Home value: $900,000 • Current loan: $400,000 • Usable equity (to 80% LVR): $900,000 × 80% − $400,000 = $320,000  You can use this $320,000 as a deposit for an investment property, potentially without any cash outlay from savings.

Question 6

How many investment properties can I buy?

Accepted Answer

There is no legal limit on the number of investment properties you can own in Australia. However, your borrowing capacity limits how many you can finance.  Each lender has their own policies on: • Number of investment properties they'll lend against • Maximum exposure to one borrower • Serviceability, how they assess rental income across a portfolio  For portfolio investors (typically 3+ properties), we use a multi-lender strategy, spreading debt across lenders to maximise total borrowing capacity and avoid single-lender concentration risk.

Investment & Property Portfolio Finance

Investment Loan Features

Negative Gearing Strategy

Interest-Only Options

Offset & Redraw

Portfolio Lending

Investment Loan Structures

Variable Rate Investment Loan

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Interest-Only Investment Loan

Split Investment Loan

Why Choose Secure Finance for Investment Lending?

Using Home Equity to Invest

Our Investment Lending Process

Investment strategy review

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Application & approval

Settlement & portfolio planning

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