Investment loan structure can influence cash flow, record keeping and future flexibility, so it should be considered before settlement.
Separate purpose clearly
Maintaining clear separation between owner-occupied, investment and other loan purposes can make administration and record keeping easier. Seek tax advice about deductibility and apportionment.
Equity is not the only test
A property may contain equity, but additional borrowing is still subject to valuation, serviceability, loan purpose and policy.
Interest-only versus principal and interest
Interest-only repayments may support short-term cash flow but do not reduce principal during that period and can increase total interest. Principal-and-interest repayments reduce the balance but require higher cash flow.
Plan for the next purchase
Cross-collateralisation, loan limits, buffers and lender selection can affect flexibility. Consider the broader portfolio rather than one transaction in isolation.
Common questions
Should investment loans be with a different lender?+
Sometimes diversification or policy differences can help, but the appropriate approach depends on pricing, security, serviceability and strategy.
Can rental income be used for borrowing?+
Lenders generally use a portion of verified rental income and apply their own assessment rules.
This guide does not consider your objectives, financial situation or needs. Lending policies, government programs and thresholds can change. Obtain current credit, legal, tax or financial advice as appropriate.