Before you dive into the property market, here’s what lenders really look for and how to structure your investment loan to set yourself up for long-term success.
Buying an investment property, whether it’s a unit, townhouse or apartment, is one of the most effective ways to build long-term wealth. For professionals and business owners, the right investment loan can help you enter the market strategically and grow your portfolio with confidence.
When it comes to investment lending, no two situations are the same. Each lender has different criteria, rates, and features and understanding your borrowing capacity is the first step. Knowing what you can comfortably borrow helps shape your property strategy before you even start looking.
What Lenders Look At
When you apply for an investment loan, lenders assess more than just the property. Key factors include:
• Loan to Value Ratio (LVR): Most lenders require a maximum LVR of 80% for investment properties to avoid lenders mortgage insurance (LMI)
• Rental yield: The property's potential rental income relative to its purchase price affects loan approval
• Your existing investment property portfolio: Lenders assess your overall exposure to property investments
• Bank statements: Recent financial records demonstrate your capacity to service the loan amount
Types of Investment Properties
Different property types offer different advantages:
Apartments: Typically offer lower entry costs and maintenance responsibilities, making them attractive for first investment property purchases. Urban apartments often provide strong rental demand from young professionals.
Townhouses: These properties combine apartment convenience with house-like features, potentially offering improved capital growth prospects and rental appeal.
Stand-alone dwellings: While requiring higher initial investment, these properties may provide superior long-term returns and broader tenant appeal.
Choosing the Right Loan Features
Investment loans come in a range of structures to suit different goals and cash flow needs. You can choose between:
• Principal and interest versus interest-only repayment options • Offset account facilities to reduce interest charges • Redraw facilities for accessing additional equity • Professional package benefits that may include fee waivers
The right setup depends on your long-term strategy, tax position, and how you plan to manage your investment over time.
How the Application Process Works
While the process can vary between lenders, it generally follows five stages:
- Pre-approval assessment: Determine your borrowing capacity based on income, expenses, and existing commitments
- Property research: Identify suitable investment opportunities within your approved loan amount
- Formal application: Submit comprehensive documentation including income verification and property details
- Property valuation: Lender conducts independent assessment of the investment property
- Final approval: Complete documentation review and loan settlement preparation
Costs Beyond the Purchase Price
Owning an investment property involves more than the loan itself. Make sure to plan for:
Stamp duty: State-based charges that vary depending on property value and location
Ongoing expenses: Property management, insurance, rates, and maintenance costs
Tax implications: Negative gearing benefits when rental income falls short of loan repayments and property expenses
Factoring these in upfront ensures your investment is sustainable and profitable.
Building a Strong Investment Strategy
Getting the loan is just the beginning. Structuring it well is what drives long-term success. A finance broker can help you:
• Compare investment loan interest rates across multiple lenders • Structure loans to optimise tax benefits • Negotiate favourable terms and conditions • Provide ongoing support throughout the property market cycles
Good lending advice ensures your investment strategy works for you — not against you.
The Takeaway
A smart investment loan isn’t just about buying property, it’s about setting up a structure that helps you grow wealth, manage risk, and stay flexible. Whether you’re purchasing your first investment or expanding your portfolio, understanding your borrowing capacity and loan options is key to success.
