Home/Residential/Investment loans
Residential lending
Buying the first one is the easy part.
What decides how far a portfolio goes isn't just the rate. It's also serviceability, structure, and which lender writes which loan in what order — and I'll guide you on all three.
Investment loans
The ceiling is set on the way up.
An investment property is a long game. Most people buy one hoping it turns into two, and the decisions made on that first loan — how it is structured, which lender writes it, where the deposit comes from — quietly decide whether the second one is possible at all. At Proficient Finance Group I take the time to understand where you are trying to get to, not just what you are buying now.
I have spent twenty-one years in lending and settled more than $600 million in home loans, with over twenty-five lenders on one panel. You deal with me from the first phone call through to settlement, and on almost every residential investment loan it costs you nothing — the lender pays a commission when the loan settles.
Where it gets interesting is the ceiling. Every lender works out what you can service differently — how much of your rental income they count, what they do with negative gearing, whether they assess your existing loans at the real rate or a much higher one. The same file can be a flat no at one lender and comfortable at another. Knowing which is which, and in what order to use them, is most of the job.
Start to finish
How it works
The same five steps every time, and the same person at every one of them.
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A conversation, not an application
Thirty minutes, on the phone or in person. Nothing touches your credit file. We cover what you own, what you owe, what you earn — and where you are trying to get to, because that changes which lender we should use first.
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The numbers, in writing
What you can borrow, what the repayments look like at today's rate and at a higher one, and the full cost to complete. Transfer duty on an investment purchase, conveyancing, building and pest, and Lenders Mortgage Insurance if your deposit is under 20 per cent.
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A shortlist, and the reasoning
Usually two or three lenders. Rate matters. So does which one will say yes — and which one leaves you the most room for the purchase after this one.
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Lodgement
I present the file the way a credit assessor needs to read it, with the rental income and the existing debts already addressed rather than queried.
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Settlement, and every year after
I stay on the file until it settles, and once a year after that I review your rate against the market.
For a portfolio there is a second thing worth doing annually: checking what you could borrow now, because values, rents and lender policy all move.
Five ways this starts
The situations I see most often
| Situation | Who it suits | What I'd tell you |
|---|---|---|
| Your first investment | Equity in the family home, or cash saved | The deposit is the question everyone asks. The one that matters more is how the loan is structured, because that is what decides whether there is a second purchase. |
| Using equity instead of cash | A home that has grown in value since you bought | The most common route, and the one most often done badly. Done properly the two loans stay separate; done carelessly the lender ties them together and you can't sell one without unwinding the other. |
| Buying the third or fourth | An existing portfolio that has stopped moving | This is where serviceability bites and where lender choice stops being about rate. Often the fix is which lender, in what order, rather than anything about you. |
| Turning your home into a rental | Moving out and keeping the old place | Do this in the right order. How the debt is arranged before you move affects what your accountant can do with it afterwards, and it is very hard to undo later. |
| Buying through a self-managed super fund | An SMSF with the trustee structure already in place | A different kind of loan with its own lender panel and its own rules. |
Buying somewhere to live rather than to rent out? The home loans page covers that, and refinancing covers releasing equity from what you already own.
Both sides of it
What it costs you
My part costs you nothing on almost every residential investment loan. The lender pays a commission when the loan settles. You don't pay more by coming through me than by going to the lender yourself.
The purchase itself has costs
You'll see all of these in writing before you commit to anything:
- Transfer dutyCalculated on the property value. The concessions available to first home buyers generally don't apply to an investment purchase, so budget for the full amount.
- Lenders Mortgage InsuranceIf your deposit is under 20 per cent. It can usually be added to the loan rather than paid up front.
- The usual purchase costsConveyancing, building and pest inspection, and loan or settlement fees where the lender charges them.
- Holding itLandlord insurance, council rates, strata if it applies, and management fees if you use an agent. Worth having in the budget before you buy rather than discovering in month two.
Later, not now
What to have ready
Nothing is needed for the first conversation. This is what we'll want by lodgement.
- Your incomePayslips and your latest notice of assessment if you're salaried; two years of returns and financials if you're self-employed.
- What you already oweStatements for every existing loan, and the limits on cards you hold — lenders count the limit, not the balance.
- Any property you already ownRecent rates notices, rental statements or the lease, and the tax return showing the property if you have one.
- Everything elsePhoto ID, and the contract or contract details if you've already found the place.
No dead ends
Where it gets hard, and what I do about it
Almost every portfolio stops for one of these five reasons, and most of them are a lender problem rather than a you problem.
Tell me where you're stuck-
You've hit the serviceability ceiling
Your bank says no more. The loans you are comfortably paying get assessed at a rate well above what you actually pay, only part of your rent is counted as income, and every card limit is treated as if it were drawn to the hilt.
What I do about itLenders differ on all three of those, and the differences are large. How much rent they count, what they do with negative gearing, whether they assess your existing loans at the real rate or an inflated one — the same file genuinely can be a no at one and a yes at another.
Often the fix isn't your income at all. It is which lender, used in which order.
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Your deposit is equity rather than cash
The usual route for a second property, and the one most often done badly. The easy version is to let one lender take both properties as security for everything, which is simple today and expensive later: you can't sell one, or refinance one, without unwinding the whole arrangement.
What I do about itWherever possible I keep the loans standalone — your home securing its own loan, the investment securing its own — with the equity released as a separate split. It is slightly more work to set up and considerably easier to live with.
If an existing portfolio is already cross-secured, that can usually be untangled at the next refinance, and it is worth doing before you buy again rather than after.
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Your income comes through an ABN
Self-employed investors get assessed on taxable income, which your accountant has spent the year legitimately reducing. The business can be doing well and the file can still read thin.
What I do about itI read a BAS and a set of financials the way a credit assessor reads them, and present the real position with add-backs evidenced rather than asserted. Several lenders on my panel will write on twelve months of returns.
The home loans page sets out how a self-employed file gets put together in more detail.
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Your own bank has run out of appetite
When all your lending sits with one lender, their view of you becomes the only view that counts — and lenders apply internal limits on how much exposure they want to a single borrower, regardless of how well you have paid them.
What I do about itSpreading a portfolio across lenders isn't just about rate. It keeps any one of them from becoming the gatekeeper for everything you want to do next, and it means a change in one lender's policy doesn't stop your plans.
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You are turning your home into an investment
People move out, rent the old place, and refinance to buy the new one — usually in that order, and usually without mentioning it to anybody first. The arrangement of the debt at that moment has consequences that are very difficult to reverse afterwards.
What I do about itWhat is deductible depends on what the borrowed money was used for, and that is your accountant's territory rather than mine. What I will do is flag it before you move rather than after, and structure the lending so your accountant has something to work with.
I'm happy to have that conversation with them directly. It is ten minutes that regularly saves people a great deal.
Find out what the next one looks like.
One call, no credit enquiry, no obligation. Tell me what you own and what you owe, and I'll tell you what's actually possible.
Asked on the phone
Questions people are too polite to ask
If yours isn't here, call and ask it. I'd rather spend ten minutes on the phone than have you not apply.
Ask Alen directlyHow much deposit do I need for an investment property?
Twenty per cent of the purchase price avoids Lenders Mortgage Insurance, and that is the clean answer. Plenty of lenders will go below it with LMI added, which can usually be capitalised into the loan rather than paid up front.
Most people use equity in a property they already own rather than cash. That works well, as long as the loans are kept separate rather than tied together — which is the point covered further up this page.
Will the rent count towards what I can borrow?
Partly. Lenders don't count the full rent, because they allow for vacancy, management fees and maintenance. How much they count varies between lenders, and so does how they treat the tax position.
This is one of the biggest differences between lenders and one of the main reasons the same application gets different answers in different places.
Interest-only or principal and interest?
Interest-only keeps the repayment lower while the term lasts, which can suit an investment where you want to direct spare cash at non-deductible debt instead. It also means the balance doesn't reduce, and the repayment steps up when the interest-only period ends.
Lenders generally price interest-only a little higher and assess you more conservatively for it. Which suits you depends on your tax position and your plan, so it is a conversation worth having with your accountant — and I'm happy to be part of it.
Can I buy in a trust or a company name?
It's common for investors, and the reasons for doing it are usually about asset protection and tax rather than lending. Not every lender will write to every structure, and those that do may price it differently or want personal guarantees.
How many properties can I actually buy?
There is no legal limit. The real limit is serviceability, and it tightens as you go, because each loan counts against the next application while only part of each rent counts in your favour.
The honest answer is that it depends on your income, your existing debt and which lenders you have used already — which is exactly why the order you use them in matters.
Will this affect what I can borrow for my own home later?
Yes. Every investment loan counts as a commitment in every future application, including one for the house you want to live in.
If both are on the horizon, say so at the start. The order you do them in, and which lender writes which, can make a material difference to whether both happen.
Also on the site
One broker for all your financing needs
Twenty-five lenders, and they don't agree.
Which is good news, if the one who said no isn't the only one you ask.