Top Strategies to Build Wealth with Investment Property

What Makes an Investment Loan Different from a Standard Home Loan

An investment loan is assessed and priced differently because the security property is not occupied by the borrower. Lenders apply a higher risk weight to investor lending, which means a higher interest rate and stricter serviceability requirements than an owner-occupier loan at the same deposit level.

Consider a buyer purchasing a two-bedroom apartment in one of the towers near Broadbeach Mall. The same 10 per cent deposit that might support an owner-occupier loan could require lenders mortgage insurance on an investment loan, and the borrower will be assessed on rental income rather than their intention to live in the property. Lenders typically shade rental income by 20 per cent to account for vacancy and holding costs, so a property advertised at $650 per week will be assessed at around $520 per week for serviceability purposes.

The loan is also assessed under the serviceability buffer, which sits at 3.0 percentage points above the loan product rate. If you are applying for a variable rate loan at 6.2 per cent, the lender tests your ability to service the loan at 9.2 per cent. That buffer applies to all new borrowers and has been in place since late 2021.

Interest-Only Repayments and How They Affect Borrowing

Interest-only repayments reduce the minimum monthly commitment during the interest-only period, which can improve cash flow in the early years of ownership. Most lenders offer interest-only terms of up to five years on investment loans, after which the loan reverts to principal and interest repayments.

The attraction for property investors is that interest-only repayments keep the loan balance constant while rental income and property values may increase. The downside is that once the loan reverts to principal and interest, the repayment amount increases because the remaining loan term is shorter and the full balance is still outstanding.

For an investor buying in Broadbeach, where body corporate fees and insurance can be substantial, an interest-only structure may suit someone focused on cash flow management rather than debt reduction. The interest paid on an investment loan used to acquire or hold a rental property remains deductible, provided the property is rented or genuinely available for rent.

How Rental Income Is Treated in Your Application

Lenders shade rental income to account for periods when the property may be vacant or under repair. The standard shading is 20 per cent, though some lenders apply a higher discount depending on the property type and location.

In Broadbeach, holiday-let properties and short-stay apartments are common, particularly near the beachfront and around The Oracle and Pavilions precincts. If you intend to use the property as a short-stay rental, be aware that lenders generally will not recognise projected short-stay income in the same way they treat a signed lease. Most will require a 12-month lease and assess the income at 80 per cent of the lease amount.

For a standard tenanted property, the lender takes the lower of the lease amount or a market rent assessment, applies the 20 per cent shading, and adds that figure to your other income when calculating serviceability. That shaded figure is then tested against the loan repayment calculated at the product rate plus the 3.0 percentage point buffer.

Deposit Requirements and Loan to Value Ratios

Most lenders will lend up to 90 per cent of the property value on an investment loan, though borrowing above 80 per cent requires lenders mortgage insurance. Some lenders cap investor loans at 80 per cent, particularly if the borrower already holds multiple investment properties or has a high debt-to-income ratio.

Lenders mortgage insurance is calculated on a sliding scale based on the loan amount and the loan-to-value ratio. The premium is a one-off cost paid by the borrower, and depending on the state, stamp duty may also apply to the premium itself.

For a buyer using equity from an existing property to fund the deposit, the lender will value both properties and calculate the combined loan-to-value ratio across the portfolio. If the usable equity is insufficient to avoid lenders mortgage insurance on the new loan, the buyer may need to contribute cash or accept the premium as part of the upfront cost.

Variable or Fixed Rate Structures for Investment Lending

Variable rate investment loans offer ongoing access to offset accounts and the ability to make additional repayments without penalty. Fixed rate investment loans lock in a rate for a set term, typically between one and five years, but often come with restrictions on extra repayments and no offset facility during the fixed period.

Many investors split the loan between variable and fixed portions. A common approach is to fix a portion of the debt to create certainty around a baseline repayment, while keeping the remainder variable to maintain flexibility and access to an offset account. The split does not need to be equal, and the proportions can be structured to suit cash flow and risk tolerance.

If you are considering refinancing an existing investment loan, the rate and features available on the new loan will depend on the current loan-to-value ratio, your income position, and the number of properties you hold. Lenders reassess your position as though you are a new borrower, including applying the current serviceability buffer and any debt-to-income limits that may apply.

Debt-to-Income Limits and Portfolio Lending

From February 2026, lenders may issue up to 20 per cent of new investor loans to borrowers with a total debt-to-income ratio of six times or greater. That limit applies separately to the investor lending portfolio of each lender, measured on a quarterly basis.

For someone with a salary of $120,000 and existing investment debt of $400,000, adding another $400,000 in new borrowing would push the total debt-to-income ratio to 6.67 times. Whether that loan is approved depends on the lender's appetite and how much of their quarterly allocation has already been used. Some lenders apply an internal cap below the regulatory maximum.

The limit does not affect existing borrowers and applies only to new lending. Bridging loans for owner-occupiers and loans for new builds are excluded from the calculation. Non-bank lenders are not currently subject to the same limit, though they apply their own credit policies and may have different serviceability overlays.

Tax Treatment and Deductibility from the 2027-28 Income Year

Losses from established residential investment properties acquired after 7:30pm AEST on 12 May 2026 are deductible only against other income from residential properties, including capital gains on residential properties, from the 2027-28 income year. Properties held before that date, and properties under contract at that time, remain fully negatively geared. New builds acquired after that date also retain full negative gearing.

For a Broadbeach investor acquiring an established apartment after mid-May 2026, any loss from that property during the 2027-28 financial year and beyond can be offset only against income from other residential rental properties or against capital gains when a residential property is sold. Excess losses can be carried forward.

The change does not affect interest deductibility. Interest on borrowings used to acquire or hold the rental property remains deductible, but the way losses are applied against other income has changed. Properties acquired between mid-May 2026 and 30 June 2027 may be negatively geared under the prior rules until 30 June 2027 only.

From 1 July 2027, the 50 per cent capital gains tax discount for individuals, trusts and partnerships on affected assets is replaced by cost base indexation using CPI and a 30 per cent minimum tax rate on real capital gains accruing from that date. For properties owned before 1 July 2027 and sold after that date, gains are apportioned between the old and new rules.

Structuring for Broadbeach's Unit Market and Body Corporate Considerations

Broadbeach's apartment stock includes a high proportion of buildings with substantial body corporate levies, reflecting the amenity and shared facilities typical of the precinct. Lenders take body corporate fees into account when assessing the net rental yield, and a property with high levies may require a larger rental income to satisfy serviceability.

Some lenders also apply loan-to-value ratio restrictions on apartments in buildings with a high proportion of short-stay or commercial use. If more than 50 per cent of the building is used for non-residential purposes, the property may be classified as non-standard security, which can limit borrowing capacity or exclude certain loan products.

Before applying for investment property finance, confirm the building's use mix and whether any special levies are planned. A building undergoing major works or with a history of special levies may be viewed less favourably by some lenders, particularly if the levy history suggests ongoing capital expenditure.

Call one of our team or book an appointment at a time that works for you. We work with investors across Broadbeach and can help you structure the loan to suit the property type, your income position, and the way you intend to hold the asset. You can reach us directly or book an appointment online.

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