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

Usually, yes. We release a separate split against your existing property to fund the deposit and costs, and the new purchase is funded by its own loan. Keeping the two standalone rather than cross-securing them preserves your ability to sell or refinance either property independently.

How much of the rent will a lender count?

Most lenders shade rental income rather than counting the full amount, commonly to around eighty per cent, to allow for vacancy, management fees and maintenance. Some apply a lower figure on apartments with high owners corporation fees, and short-stay income is treated far more conservatively again.

Should I go interest only?

It improves cash flow now and costs more over the full term, and it can reduce what other lenders will let you borrow later. It suits investors with a clear reason and a plan for the end of the period. It is a poor default choice made simply because the repayment looks smaller.

What is cross-collateralisation and why avoid it?

It is where one lender holds two or more properties as security for the same lending. It is easy to set up and difficult to unwind. Selling one property then requires the lender’s consent, a revaluation of the others, and often a partial repayment. Standalone structures keep the decisions yours.

Do I need a bigger deposit for an investment property?

Often, yes. Investment LVR ceilings are usually a little lower than owner-occupied, and mortgage insurance policy is tighter. Twenty per cent plus costs is the clean position. Above eighty per cent LVR it is still possible with several lenders, with LMI applied.

Can I claim the interest on an investment loan?

Deductibility depends on the use of the borrowed funds and on your circumstances, and it is decided by tax law rather than by the lender. Mixing private and investment purposes in one loan account makes it far harder to substantiate. Speak to a registered tax agent before settlement.

Can I turn my current home into an investment and buy a new one?

Yes, and it is a common path. The lender assesses the expected rent on the departing home, shaded, alongside the new purchase. The tax consequences of the switch, including the treatment of any redraw you have used, are worth confirming with a registered tax agent first.

Why does my borrowing capacity fall so much after the second property?

Existing investment loans are assessed at a buffered rate and often as principal and interest, while only part of the rent is counted. The gap between assessed cost and counted income compounds with each property. Lender selection and loan structure are what keep the third purchase reachable.

Can I buy an investment property while carrying business or tax debt?

Sometimes, but it is rarely the right order. Lenders assess the tax position and the trading position, and an unresolved ATO balance affects both. Clearing or restructuring that debt first usually improves capacity and pricing more than the investment purchase would return in the same period.

A tenanted property assessed as an income stream rather than a home, which is how a lender reads it.

INVESTMENT LENDING

Investment Property Loans

Structure decided before settlement is worth more than a rate negotiated after it. We set investment lending up so the second and third purchase are still possible.

Plan an investment purchase 1300 015 267

Lender panel
40+
Structure
Standalone or equity-funded
Focus
Portfolio capacity, not one deal
Combined experience
45+ years

Is this you?

If any of these are true, we can help.

Talk it through

First-time investors buying with equity released from the family home.
Owners deciding whether to keep the current home as a rental and buy again.
Investors with two or three properties who have hit a servicing wall.
Self-employed buyers whose investment lending needs to work alongside business debt.
Anyone whose existing loans are cross-secured and who wants them untangled.

How it works

Three moves, in plain words.

01
Capacity across the portfolio
Not just this purchase. We model what this loan does to your ability to buy again, because the third purchase is usually where a poorly structured second one bites.
02
Equity release, if that is the deposit
A separate split against the existing property, sized to the deposit and costs, arranged before you bid.
03
Pre-approval
Lodged with the lender whose investor policy suits the file, not simply the one holding your current loan.

Structure it before you bid

Plan an investment purchase 1300 015 267

How lenders read an investor differently

An owner-occupier is assessed on income against commitments. An investor is assessed on the same thing plus a set of adjustments that reliably make the numbers smaller than the spreadsheet at home suggests.

Rental income is shaded. Most lenders count only part of the gross rent, commonly around eighty per cent, to allow for vacancy, agent fees and repairs.
Existing investment loans are assessed at a buffered rate, and often at principal and interest even where you are paying interest only.
Where an interest-only period is in place, several lenders assess the principal repayment over the remaining term after it ends, which compresses capacity sharply.
Negative gearing benefits are treated conservatively or ignored entirely by some lenders.
Investment pricing and LVR ceilings are generally a little tighter than owner-occupied.

This is why two lenders can produce capacity figures that differ by a very large margin on the same file. Lender selection matters more for investors than for almost anyone else.

Rental shading: Counting only part of the gross rent as income, to allow for vacancy, management fees and repairs. The discount varies by lender and by property type.
Assessment rate: The buffered rate a lender tests your repayments at, which sits above the rate you would actually pay. It applies to existing loans as well as the new one.
Cross-collateralisation: One lender holding two or more of your properties as security for the same lending. Easy to set up, and a negotiation to unwind.
Standalone structure: Each property secured by its own loan, with the deposit funded by a separate split. More accounts, and every future decision stays yours.
Interest-only period: A defined term during which no principal is repaid. Several lenders assess the principal over the shortened remaining term afterwards, which is what compresses future capacity.

The detail

Using equity instead of cash

Most investment purchases in Australia are funded by releasing equity from an existing property rather than by saving a second deposit. There are two ways to do it, and they are not equivalent.

Two ways to use equity
Structure	How it works	What it costs you
Cross-collateralised	One lender holds both properties as security for both loans	Simple to set up, hard to unwind. Selling one property requires the lender’s consent and a revaluation of the other
Standalone with an equity release	A separate split is released against the existing property and used as the deposit. The new purchase is funded by its own loan	More accounts to manage, and slightly more work upfront

What cross-securing costs you later

Selling one property needs the lender’s consent and a revaluation of the others.
Sale proceeds can be directed to reduce the remaining lending rather than released to you.
Moving one loan elsewhere means unwinding the whole arrangement first.
A fall in one property’s value affects the LVR across all of them.

What standalone preserves

Any single property can be sold or refinanced without touching the others.
Net proceeds on a sale are yours, subject only to that property’s own loan.
You can move one lender without moving all of them, which keeps competitive pressure available.
The deposit split stays visible and separately identifiable, which keeps purpose clean.

The two structures, judged on the decisions that come later

	Cross-secured	Standalone
Sell one property without the lender’s consent	No	Yes
Keep the net proceeds of that sale	Sometimes	Yes
Move one loan elsewhere without unwinding the rest	No	Yes
A fall in one valuation leaves the others alone	No	Yes
Deposit split stays separately identifiable	Sometimes	Yes
Simple to set up across a branch counter	Yes	Sometimes

The only line cross-securing wins is the one that happens on day one. Every other row is a decision you would rather keep in your own hands, and each of them arrives years after the paperwork that gave it away.

General lender practice. Terms vary by lender and by the loan contract itself.

View as a table

	Cross-secured	Standalone
Sell one property without the lender’s consent	No	Yes
Keep the net proceeds of that sale	Sometimes	Yes
Move one loan elsewhere without unwinding the rest	No	Yes
A fall in one valuation leaves the others alone	No	Yes
Deposit split stays separately identifiable	Sometimes	Yes
Simple to set up across a branch counter	Yes	Sometimes

Interest only, or principal and interest

Interest only lowers the repayment during the interest-only period and repays nothing off the balance. That is useful for cash flow and it has a cost that arrives later.

The honest comparison
	Interest only	Principal and interest
Repayment during the period	Lower	Higher
Balance at the end of the period	Unchanged	Reduced
Repayment after the period	Higher, because the principal is repaid over a shorter remaining term	Steady
Assessment by other lenders	Often assessed harshly, which reduces future capacity	Assessed straightforwardly
Total cost over the full term	Generally higher	Generally lower
Typical pricing	Usually a premium over principal and interest	Usually the cheaper of the two

What five years of interest only leaves behind

Interest only does not pause the loan. It pauses the repayment of it. Ten years in the balances are about $86,000 apart, and the interest-only loan is now repaying the same principal across a shorter remaining term than it started with.

Illustrative projection only, at an assumed constant rate. Not a quote and not an offer of credit.

View as a table

Month	Interest only for five years	Principal and interest throughout
0	$600,000	$600,000
30	$600,000	$566,000
60	$600,000	$528,000
90	$565,000	$486,000
120	$525,000	$439,000

Whether the interest is deductible, and how that interacts with your overall position, is a tax question rather than a lending one. Put it to a registered tax agent before you choose, because the structure is much easier to set than to change.

Structure decisions worth making early

Ownership structure, loan splits and where the offset sits are the decisions that are cheap on day one and expensive on day one thousand.

01Keep the deposit split against the existing property separate and clearly identifiable, rather than mixed into the home loan.
02Keep private and investment borrowings in separate loan accounts so purpose is never blended.
03Put the offset against non-deductible debt, which is usually the owner-occupied loan, not the investment one.
04Decide ownership, whether personal, joint, company or trust, with your accountant before you sign a contract. It affects lending options as well as tax.
05Avoid redraw on an investment loan where an offset would do the same job without the tax complications.

Ownership structure, negative gearing, depreciation schedules and land tax are all matters for a registered tax agent or accountant. We build the lending around the structure they recommend. We do not advise on the structure itself.

The costs beyond the loan

Holding costs an investor carries
Cost	Notes
Stamp duty	State-based, and no first home concession applies to an investment purchase
Land tax	State-based and assessed on land holdings above a threshold. It surprises second-property owners regularly
Property management	A percentage of rent, plus letting and administration fees
Vacancy	Budget for it rather than assuming a continuously tenanted year
Repairs and maintenance	Ongoing, and larger on older stock
Owners corporation fees	Where the property is a unit or apartment, and material on buildings with lifts or pools
Insurance	Building and landlord cover, which are different policies
Council and water rates	Some are recoverable from the tenant, some are not, depending on the state

A tenanted property read as an income stream carrying a set of standing costs, which is how a lender sees it. — Land tax is the line second-property owners most often meet for the first time, because it is assessed on total land holdings rather than on any single property.

Documents for an investment application

Investment file checklist
Document	What it evidences
Identification	For each applicant
Income evidence	Payslips, or two years of returns and financials for self-employed applicants
Existing loan statements	Balance, limit, repayment type and conduct for every property
Rental statements or a rental appraisal	Existing rent received and expected rent on the new property
Rates and land tax notices	Holding costs and ownership
Owners corporation certificate	Where applicable, including the levy amount
Contract of sale	For the purchase
Liability statements	Cards, personal loans, buy-now-pay-later and asset finance
Tax returns	Which show existing property income and deductions

How an investment purchase runs

01
Capacity across the portfolio
Not just this purchase. We model what this loan does to your ability to buy again, because the third purchase is usually where a poorly structured second one bites.
02
Equity release, if that is the deposit
A separate split against the existing property, sized to the deposit and costs, arranged before you bid.
03
Pre-approval
Lodged with the lender whose investor policy suits the file, not simply the one holding your current loan.
04
Purchase and full approval
Contract to the lender, valuation ordered, rental appraisal obtained, conditions cleared.
05
Documents and settlement
Loan documents signed, structure confirmed, settlement booked with your conveyancer.
06
Post-settlement
Landlord insurance in place, management appointed, and the file reviewed at twelve months against the next purchase.

When to slow down

Investment lending rewards patience more than it rewards speed. There are positions where the honest advice is to wait a cycle.

Servicing only works on an interest-only assessment and there is no plan for what happens when the period ends.
The existing portfolio is already cross-secured and needs untangling before anything is added to it.
Business or tax debt is sitting behind the personal position. That is worth resolving before adding leverage.
The purchase depends on a rental figure at the very top of the appraisal range.
There is no cash buffer left after settlement. Vacancy and repairs are not hypothetical.

Run the numbers

See it with your own figures.

Indicative only. Change anything — the defaults are starting points, not quotes.

The loan

Loan amount

The amount you are borrowing, or the balance you are refinancing.

Total loan term

The full life of the loan, including the interest-only period.

Interest-only period

How long you pay interest only before principal and interest starts.

The rates you have been quoted

Rate during the interest-only period

Assumption only. Replace it with the rate your lender has actually quoted. Interest-only is often priced above principal and interest, so set the two fields separately.

Rate after the interest-only period

Assumption only, and the same rate is used for the straight principal and interest comparison so the two structures are judged on equal terms.

Repayment step-up

$1,010

Your repayment climbs from $3,500 to $4,510 a month the day the interest-only period ends, 5 years from settlement.

That is a rise of 29% in one month.

Interest-only repayment: $3,500 / month
Repayment once interest-only ends: $4,510 / month
Principal and interest from day one: $4,197 / month
Balance still owing when interest-only ends: $700,000
Total interest, interest-only structure: $863,033
Total interest, principal and interest: $810,867
Extra interest over the life of the loan: + $52,166

Monthly repayment, side by side

Interest-only$3,500

After the interest-only period$4,510

Principal and interest throughout$4,197

Total interest over the term

Interest-only structure$863,033

Principal and interest throughout$810,867

The honest version

Interest-only lowers what you pay now. It does not lower what the loan costs. It keeps $697 a month in your hands while it runs, and the balance sits exactly where it started. When the period ends, the same debt has to be repaid over 25 years instead of the full term. That is the step-up, and it is the part worth planning for.

Plan for the step-up, not around it

Send us the loan, the term and the interest-only period you have been offered. We will show you what the repayment looks like the month it lands, and whether the structure still earns its place in your plan.

Talk it through with a broker

What this calculator assumes

The interest-only period is genuine interest-only. Only interest is paid and the balance does not move.
When the interest-only period ends, the full balance is amortised over the remaining term at the rate you entered in the second rate field.
The straight principal and interest comparison uses that same second rate, so the two structures are compared on the rate rather than on the structure plus a rate gap.
Repayments are monthly, in arrears, and the rate holds steady for the whole term. Real rates move, and a variable loan will not behave this smoothly.
No application fees, ongoing fees, discharge fees, offset balances, redraw or extra repayments are included.
The interest-only period is capped at twelve months short of the total term so there is always time left to repay the principal.
Both rate fields are placeholders for you to overwrite. They are not rates WeL’nd is offering and they are not a quote from any lender.

Open the full calculator

“Tell me the number. I have almost certainly seen worse.”

Dave Pham · Head Broker

Talk to Dave1300 015 267

FAQ

Questions people actually ask

If yours is not here, ask it. We would rather answer the awkward one early than have you find out later.

1300 015 267

Can I use the equity in my home to buy an investment property?: Usually, yes. We release a separate split against your existing property to fund the deposit and costs, and the new purchase is funded by its own loan. Keeping the two standalone rather than cross-securing them preserves your ability to sell or refinance either property independently.
How much of the rent will a lender count?: Most lenders shade rental income rather than counting the full amount, commonly to around eighty per cent, to allow for vacancy, management fees and maintenance. Some apply a lower figure on apartments with high owners corporation fees, and short-stay income is treated far more conservatively again.
Should I go interest only?: It improves cash flow now and costs more over the full term, and it can reduce what other lenders will let you borrow later. It suits investors with a clear reason and a plan for the end of the period. It is a poor default choice made simply because the repayment looks smaller.
What is cross-collateralisation and why avoid it?: It is where one lender holds two or more properties as security for the same lending. It is easy to set up and difficult to unwind. Selling one property then requires the lender’s consent, a revaluation of the others, and often a partial repayment. Standalone structures keep the decisions yours.
Do I need a bigger deposit for an investment property?: Often, yes. Investment LVR ceilings are usually a little lower than owner-occupied, and mortgage insurance policy is tighter. Twenty per cent plus costs is the clean position. Above eighty per cent LVR it is still possible with several lenders, with LMI applied.
Can I claim the interest on an investment loan?: Deductibility depends on the use of the borrowed funds and on your circumstances, and it is decided by tax law rather than by the lender. Mixing private and investment purposes in one loan account makes it far harder to substantiate. Speak to a registered tax agent before settlement.
Can I turn my current home into an investment and buy a new one?: Yes, and it is a common path. The lender assesses the expected rent on the departing home, shaded, alongside the new purchase. The tax consequences of the switch, including the treatment of any redraw you have used, are worth confirming with a registered tax agent first.
Why does my borrowing capacity fall so much after the second property?: Existing investment loans are assessed at a buffered rate and often as principal and interest, while only part of the rent is counted. The gap between assessed cost and counted income compounds with each property. Lender selection and loan structure are what keep the third purchase reachable.
Can I buy an investment property while carrying business or tax debt?: Sometimes, but it is rarely the right order. Lenders assess the tax position and the trading position, and an unresolved ATO balance affects both. Clearing or restructuring that debt first usually improves capacity and pricing more than the investment purchase would return in the same period.

Credentials

Credit Representative 554029
ABN 20 672 801 651
FBAA member
AFCA external dispute resolution

Other ways we can help

Reading

Worth understanding first

All of home loans

Where we work

Structure it before you bid

We will model what this purchase does to your capacity for the next one, release the deposit cleanly, and keep your properties standalone.

Or call us

1300 015 267

Monday – Friday, 09:00 to 17:30

“Tell me the number. I have almost certainly seen worse.”

Dave Pham · Head Broker

Talk to Dave1300 015 267

Investment Property Loans

If any of these are true, we can help.

Three moves, in plain words.

Capacity across the portfolio

Equity release, if that is the deposit

Pre-approval

How lenders read an investor differently

The detail

Using equity instead of cash

What cross-securing costs you later

What standalone preserves

The two structures, judged on the decisions that come later

Interest only, or principal and interest

What five years of interest only leaves behind

Structure decisions worth making early

The costs beyond the loan

Documents for an investment application

How an investment purchase runs

Capacity across the portfolio

Equity release, if that is the deposit

Pre-approval

Purchase and full approval

Documents and settlement

Post-settlement

When to slow down

See it with your own figures.

Monthly repayment, side by side

Total interest over the term

The honest version

Plan for the step-up, not around it

Questions people actually ask

Other ways we can help

Cash-Out Refinance

Refinancing

SMSF Home Loans

Worth understanding first

Offset vs Redraw

How Much Equity Do You Need to Consolidate Debt?

Fixed vs Variable in a Changing Market

Structure it before you bid