Your investment goal should decide your loan structure, not the other way around. Before you compare lenders, decide whether the property is there to grow your wealth, produce rental income, or both.
That one decision shapes almost every other choice. For investors in Burleigh Heads, it is the best starting point for a conversation about an investment loan.
How Does Your Property Investment Goal Shape the Loan?
A growth goal and an income goal call for different loan structures. If you want long-term growth, you will usually care most about holding costs and keeping your borrowing sustainable. If you want rental income, you will focus on cash flow after interest and expenses.
Put your goal in one sentence before you speak to a broker. For example: "Hold for at least ten years and keep repayments manageable on my current income." That sentence tells us which features matter, such as an offset account, a fixed or variable rate, or an interest-only period. Each feature has a trade-off, so the aim is to match the trade-off to your plan.
Interest Only or Principal and Interest: Which Suits Your Strategy?
Interest-only repayments lower your repayments for a set period, but you do not reduce the loan balance during that time. Principal and interest repayments cost more each month but pay the loan down.
Consider an investor in Burleigh Heads who borrows $500,000 over 30 years and wants to keep cash flow comfortable in the early years. These figures use an illustrative rate of 6.75% p.a. for both options.
- Interest only: about $2,813 per month, with the balance staying at $500,000.
- Principal and interest over 30 years: about $3,243 per month, which is roughly $430 more.
The investor chooses a five-year interest-only period to ease early cash flow. When it ends, the loan reverts to principal and interest over the remaining 25 years. At the same illustrative rate, that repayment is about $3,455 per month, roughly $212 higher than if they had chosen principal and interest from day one. The outcome is lower repayments for five years, followed by a higher repayment and a balance that has not moved.
Two more points matter. Lenders assess interest-only loans on the principal and interest repayment over the remaining term, so an interest-only period does not increase how much you can borrow. Also, only the interest portion of repayments is deductible on either structure, so ask your accountant how this applies to you.
Ready to get started?
Book a chat with a Mortgage Broker at Financial Scope Brokers today.
How Much Can You Borrow for an Investment Property?
Your investment loan amount depends on your income, existing debts, living costs and the lender's policy. There is no single figure that applies to everyone.
Banks and other authorised deposit-taking institutions must test your ability to repay at a rate at least 3.0 percentage points above the loan rate. That means a loan that looks affordable today still has to pass a tougher test. Many lenders count only part of expected rent. APRA's guidance points to a minimum 20 per cent haircut, so no more than 80 per cent of expected rent is counted. Lenders may accept a rental appraisal for a new purchase, depending on their policy, and APRA's guidance expects less reliance on appraisals than on actual rent received.
Existing debts also reduce your capacity. Credit card limits are generally assessed on the limit, not the balance, so closing unused cards before applying can help. Our borrowing capacity page explains how different factors move the number.
Deposit size matters too. Borrowing above 80 per cent of the property value generally requires Lenders Mortgage Insurance. This is a cost you pay, and the premium depends on the loan amount and the lender's insurer. The 80 per cent point is not a legal limit, and each lender sets its own caps.
Negative Gearing Rules for Properties Bought After 12 May 2026
Negative gearing rules now depend on when you bought and what you bought. Losses on residential properties held at 7:30pm AEST on 12 May 2026, including those under contract, can still be deducted against other income until the property is sold.
For established residential properties bought after that time, the rules change from the 2027-28 income year. Net rental losses will only be deductible against other residential property income, including residential capital gains, and unused losses can be carried forward. Properties bought between 12 May 2026 and 30 June 2027 can be negatively geared under the current rules until 30 June 2027 only. Eligible new builds acquired after 12 May 2026 can continue to deduct losses against all income.
If you plan to rely on tax deductions to carry the property, build that into your decision early. The rule does not change whether interest is deductible, but it changes how a loss can be used. Get advice from your accountant before you buy, because your outcome depends on your own circumstances.
Capital gains tax is also changing. From 1 July 2027, the 50 per cent CGT discount is replaced by cost base indexation and a 30 per cent minimum tax on real gains accruing from that date. For assets held before then, the gain accruing before 1 July 2027 is still taxed under the current discount rules. Eligible new builds can elect either the discount or indexation. Ask your accountant how this applies to you.
Can You Use Equity or Refinance to Grow Your Portfolio?
Yes, many investors use equity in an existing property as the deposit for the next one, but the borrowed amount adds to your total debt. If values fall or rents drop, you carry that risk across more than one property.
Lenders set their own limits on how much equity you can access and may require a valuation of the property. Refinancing can also be a way to restructure existing loans, though costs such as discharge fees may apply depending on your lender. Our refinancing page covers what to weigh up.
Tax needs care here. Deductibility depends on how the borrowed money is used, not on the property that secures it. Funds used for a private purpose, such as a holiday, are not deductible, and that can affect the deductible portion of the loan. Keep investment borrowings separate from personal ones where you can.
If you already hold loans, a loan health check can show whether your current structure still fits your goals before you add another property.
If you want a local view, our Burleigh Heads mortgage broker team can compare options from lenders across Australia and match them to your plan. Call one of our team or book an appointment at a time that works for you.
Frequently Asked Questions
Does an interest-only period increase how much I can borrow?
No. Lenders assess interest-only loans on the principal and interest repayment over the remaining term, so the feature does not lift your borrowing amount. It lowers repayments for a set period, but the balance stays the same.
Do I need Lenders Mortgage Insurance on an investment loan?
It is generally required when you borrow above 80 per cent of the property value. The premium is paid by the borrower, and each lender sets its own policy above that level.
Can I still negatively gear an investment property?
It depends on when you bought and what you bought. Properties held at 12 May 2026 and eligible new builds keep current treatment, while later established purchases face new limits from the 2027-28 income year. Check with your accountant.
Is interest on money borrowed against my investment property always deductible?
No. Deductibility depends on how the borrowed funds are used, not on the security. Funds used for private purposes are not deductible, so speak with your accountant.
