Top Strategies to Finance Different Investment Properties

The Property Type Shapes the Loan Structure

The type of investment property you buy determines which lenders will lend, how much they will lend, and what rate they will charge. A lender assessing a house and land package in Doubleview applies a different set of risk criteria than one assessing a studio apartment in Perth's CBD, even when the borrower and the price are identical.

Consider a scenario where an investor purchases a three-bedroom brick-and-tile house in Doubleview. The lender treats this as a standard residential security with a loan to value ratio capped at 90 per cent (including Lenders Mortgage Insurance). That same investor looking at a serviced apartment in the city may find a 70 per cent cap and a higher interest rate applied because the lender categorises serviced apartments as specialised or restricted securities. The physical characteristics of the property change the risk profile, and the lender adjusts the investment loan terms to match.

Doubleview sits within the City of Stirling and has historically attracted both owner-occupiers and investors due to its proximity to Scarborough Beach and established infrastructure. The suburb features predominantly detached houses and a small number of low-rise unit complexes, which means the investment stock tends to fall within mainstream lending categories rather than specialist asset classes.

Houses Versus Units in a Lending Context

Standalone houses generally attract the widest range of lenders and the most flexible loan products. Most lenders will advance up to 90 per cent of the property value for a standard house, and some offer interest rate discounts tied to the loan size or the borrower's existing relationship.

Units and apartments require more scrutiny. Lenders examine the body corporate records, the percentage of owner-occupiers versus tenants in the complex, and whether the building is classified as non-standard construction. A unit in a small group of six may receive the same treatment as a house, while a unit in a high-rise complex may trigger additional lending conditions. Some lenders impose a hard cap on lending for properties above a certain floor level or properties in buildings with more than a set number of storeys.

In Doubleview, the majority of stock is freestanding, so investors purchasing here generally deal with standard residential lending criteria. Those looking at nearby suburbs with higher-density developments should confirm the lender's unit policy before proceeding, particularly if the property sits in a building with more than three storeys or includes shared facilities that require higher body corporate levies.

New Builds and the Extended Negative Gearing Window

From 1 July 2027, net rental losses on residential investment properties acquired after 7:30pm AEST on 12 May 2026 can only be offset against other residential rental income or carried forward to offset future residential rental income or capital gains. Losses cannot be offset against salary or wages. The exception is eligible new builds, defined as dwellings constructed on previously vacant land or dwellings that increase the total number of dwellings on a site. These properties retain full negative gearing treatment for the first investor who purchases them.

Consider an investor purchasing a new duplex development in Doubleview where a single dwelling has been replaced by two. The investor acquires one of the two dwellings after settlement in late 2027. Because the development increased the dwelling count, the property qualifies as an eligible new build. The investor can deduct the full net rental loss against other assessable income, including salary, under the same rules that applied before the legislative change. The second investor who eventually purchases that same dwelling in a subsequent transaction loses access to that treatment, and losses become quarantined.

This creates a sharp distinction between new and established stock for investors with income they want to shelter. For buyers in Doubleview, where vacant land is rare and most new construction involves knock-down rebuilds of single dwellings, confirming whether a rebuild qualifies as an eligible new build is a necessary step before committing to the purchase.

Interest-Only Versus Principal-and-Interest Repayment Structures

An interest-only period allows the investor to minimise cash outflow during the early years of ownership, which can be useful when rental income does not cover all holding costs. Most lenders offer interest-only terms of up to five years on investment loans, with some extending to ten years depending on the loan to value ratio and the borrower's financial position.

After the interest-only period ends, the loan reverts to principal and interest repayments, and the repayment amount increases. An investor who has not planned for this increase may face a cash shortfall or may need to refinance to extend the interest-only term. Some investors prefer to start with principal and interest from the outset to reduce the outstanding balance and build equity faster, particularly if they plan to use that equity to fund further purchases.

The choice between interest-only and principal-and-interest also affects the maximum loan amount a lender will approve. When assessing borrowing capacity, lenders calculate serviceability based on principal-and-interest repayments at a rate that includes the serviceability buffer, even when the investor applies for interest-only. The result is that an interest-only structure lowers the monthly repayment but does not increase the borrowing limit.

Variable, Fixed, or Split Rate Structures

Variable rates move with the lender's decisions and broader market conditions, and they typically include features such as offset accounts and the ability to make extra repayments without penalty. Fixed rates lock the interest rate for a set term, usually between one and five years, and provide certainty over repayment amounts during that period. Split structures combine both, allocating part of the loan to variable and part to fixed.

For investors, the offset account attached to a variable rate portion can reduce the interest charged without reducing the loan balance. Because investment loan interest is generally deductible, the benefit is the reduced interest expense rather than a faster reduction in the principal. An investor with surplus cash in an offset account effectively earns a return equal to the loan's variable interest rate without paying tax on that return.

Fixed rates do not usually allow offset accounts or unlimited extra repayments. An investor who fixes the full loan amount and later wants to repay a lump sum or refinance before the fixed term ends may incur break costs. A split structure allows the investor to maintain some flexibility on the variable portion while locking part of the interest cost.

Specialised Property Types and Restricted Securities

Some property types fall outside standard residential lending policies and are classified as restricted or specialised securities. These include serviced apartments, properties with commercial zoning, properties on leasehold land, and properties that do not meet the lender's minimum size or construction standards.

Lenders typically apply a lower loan-to-value ratio to these properties, often capping lending at 60 or 70 per cent, and may charge a higher interest rate or require a larger deposit. In some cases, lenders will not lend against the property at all, which limits the investor's options to non-bank lenders or cash purchase.

Doubleview does not have a significant concentration of specialised property types, but investors considering properties in mixed-use developments or properties with unusual titles should confirm the lender's policy early. A property advertised as an investment opportunity may not meet the definition of a standard residential security, and that distinction can change the entire financing structure.

Deposit and Equity Requirements

Most lenders require a minimum deposit of 10 per cent for an investment property, though some will lend at higher loan-to-value ratios if the borrower pays Lenders Mortgage Insurance. LMI is a one-off cost that protects the lender if the borrower defaults, and the premium increases as the loan-to-value ratio rises.

Investors who already own property can use equity in that property as a deposit for the next purchase. The lender values the existing property, calculates the available equity based on the lender's maximum loan-to-value ratio, and allows the borrower to use that equity without selling the existing property. This approach can accelerate portfolio growth but also increases the total debt and the risk exposure if property values fall or rental income declines.

In Doubleview, where median values have remained relatively stable, investors using equity from an existing property need to account for valuation risk. A lender's valuation may come in lower than the investor expects, which reduces the available equity and may require additional cash deposit to proceed.

Rental Income and Serviceability Assessment

Lenders include rental income when calculating an investor's ability to service a loan, but they do not use the full amount. Most lenders apply a shading factor, typically 80 per cent, to account for vacancy periods and rental management costs. If a property generates $600 per week in rent, the lender will assess serviceability using $480 per week.

The assessed rental figure comes from the lender's valuation, not the investor's estimate or the property manager's appraisal. If the valuer assesses the rental income at a lower figure than expected, the borrowing capacity falls. Investors purchasing in Doubleview should be aware that rental valuations reflect recent comparable leases in the area, and a property marketed with an optimistic rental estimate may not be reflected in the formal assessment.

APRA's debt-to-income cap, effective from 1 February 2026, limits the proportion of loans a lender can approve at six times the borrower's income or higher. For investors with multiple properties or high levels of debt, this cap can restrict the ability to borrow further even when rental income is strong. The cap applies separately to investor and owner-occupier lending, so an investor's total debt position is measured against the 20 per cent threshold for new investor loans.

Selecting the Right Loan Structure for Your Property Type

The structure that works for a house in Doubleview will not necessarily work for a unit in a high-rise or a new duplex on subdivided land. The lending criteria, the tax treatment, and the holding costs differ across property types, and the right loan structure depends on the specific characteristics of the property and the investor's broader financial position.

Shoreside Finance works with property investors across the northern suburbs to match the loan structure to the property and the strategy. Call one of our team or book an appointment at a time that works for you.

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