Investment Property Loans

Interest-only is common on investment loans because the interest is tax-deductible and the principal isn't, so paying down principal on investment debt before paying down your home loan is usually inefficient. Most investors run interest-only for the first 5-10 years, then switch to P&I. Speak to your accountant — for some investors with negative gearing it's even more clear-cut.

Cross-collateralisation means using one property as security for the loan against another. It can simplify the application but it locks the properties together — when you sell or refinance one, the bank can revalue or demand changes on the other. We almost always structure investment loans as standalone (each property securing only its own loan) so each can be sold, refinanced, or restructured independently.

Servicing for investment loans is calculated using your total income (PAYG + rental income, usually shaded to 75%-80% to allow for vacancy) minus all your debt commitments (assessed at a higher 'stress test' rate). Investment serviceability tightens as your portfolio grows. We model your 'borrowing tank' across multiple lenders since some are far more generous on rental income than others.

Yes. The most common structure is: refinance your home loan to release equity (up to 80% LVR no LMI, or up to 90%-95% with LMI), use that equity as deposit + costs on the investment property, then take out a separate investment loan for the rest. We model the cash flow impact and the tax structure before recommending the split.

LMI applies to investment loans the same way it does to owner-occupied — typically required when borrowing over 80% LVR. The premium is often higher for investment property than owner-occupied. Some lenders waive LMI for certain professionals (doctors, lawyers, accountants) even on investment, which can save $10k-$30k.