Investment Lending: Your Roadmap to Buying an Investment Property

The short answer

Buying an investment property involves more than finding the right rate. How you fund it, structure it, and hold it can make a big difference to your cash flow, your tax position and your next purchase.

We’ve covered many investor topics in other lessons:

• Borrowing power for investors: how lenders count rent, property costs and negative gearing.
• P&I vs interest only: why IO on investments and P&I on your home can be tax-effective.
• Using equity: how to fund your deposit from the equity in your home.
• Loan structuring: standalone loans, splits and debt recycling.

This lesson fills in the rest.

Investor rates

Investment loans usually carry higher rates than owner-occupied loans. Lenders see them as slightly higher risk, and they’re required to hold more capital against them. Interest-only investment loans typically sit higher again.

The gap varies between lenders, which is one more reason to compare widely.

Cash vs equity

You can fund your deposit and purchase costs with cash savings, equity from your home, or a mix of both.

• Using equity: because the borrowed funds are used to buy an income-producing property, the interest on them may be tax deductible.
• Using cash: cash you put in isn’t borrowed, so there’s no interest to deduct. Many investors prefer to keep their cash in an offset against their non-deductible home loan instead.

Keep a buffer. Whichever way you fund it, keep some cash or offset savings aside for vacancies, repairs or rate rises. Investment properties rarely run perfectly every month.

Tax outcomes depend on your circumstances, so check with your accountant.

Rentvesting

Rentvesting means renting where you want to live, while buying an investment property where you can afford to. It can get you into the market sooner, and keep you close to work, family or lifestyle.

Keep in mind that first home buyer concessions are often tied to living in the property, so buying an investment first may affect your eligibility later. It’s worth planning the sequence before you buy.

Holding costs

Beyond your loan repayments, budget for the ongoing costs of owning an investment:

• Council rates, water and strata levies
• Landlord insurance and property management fees
• Repairs and maintenance
• Land tax: depending on your state and the value of the land you own.
• Vacancies: periods with no rent coming in.
• Rate rises: higher repayments if rates go up.

Buying in a trust or company

Some investors buy through a trust or company for reasons like asset protection or how income is distributed. Many lenders will lend to these entities, usually with personal guarantees from the directors or trustees.

Buying with partners or friends? A company or unit trust can be a good alternative to buying in your personal names. Each person’s share is clearly set out, which gives a cleaner split of the asset and the rental income, and can make it simpler if someone wants to exit later.

Be careful, as it’s not for everyone. Entities come with added costs every year, such as accounting, tax returns and compliance, and can affect land tax, stamp duty and how losses are treated. Whether the benefits outweigh the costs depends on your situation, so get advice from your accountant before you buy.

SMSF lending

Self-managed super funds can borrow to buy property through a limited recourse borrowing arrangement. The rules changed in 2026:

• Residential property: from 10 August 2026, SMSFs can no longer take out new loans to buy residential property. Existing loans are grandfathered.
• Refinances are still available: if your SMSF already has a residential property loan on a high rate, you can still refinance to get out of it.
• Commercial property: borrowing is still allowed. For business owners, buying commercial premises through your SMSF and leasing it to your business at market rent can be a powerful, tax-effective strategy, worth exploring with your accountant and a licensed SMSF adviser.

SMSF lending is a specialist area with strict rules. Speak to us alongside your accountant and SMSF adviser before you proceed.

Plan the road trip

Building a property portfolio is like a long road trip. Before you set off, you want to know where your fuel stops are, your equity and cash flow, and the best route to take, your loan structure.

We help you map the journey. With access to over 40 lenders, our team of lending specialists can help you fund, structure and grow your investment portfolio, so you can focus on the most important part: living your life.

Book a chat · Next lesson: How rate changes affect you

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General information only. This article does not consider your objectives, financial situation or needs and is not credit, financial or tax advice. SMSF information is current as at November 2026. Seek advice from a licensed credit adviser, your accountant and, where relevant, a licensed financial or SMSF adviser before acting. Insight Property Finance.