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Investing in property isn’t simply about finding the cheapest interest rate. As an experienced investment property mortgage broker, we know the lender you choose, the way your loans are structured and the policies that sit behind those loans can have a far greater impact on your ability to build wealth over time than a 0.10% rate difference ever will.
Many investors focus on today’s interest rate without realising that the wrong lender can quietly reduce their future borrowing capacity, make it harder to access equity, or limit their ability to purchase the next investment property.
At What If We Finance, we’ve been helping Melbourne investor’s structure finance for their portfolios since 2008. We’re not just comparing loan products; we’re an investment lending specialist, working with a panel of 50+ lenders to build a finance strategy that supports your first purchase and every purchase after it.
Before you sign up for an investment loan, these are the questions that determine how far you can go:
These decisions typically matter far more to your long-term wealth than a small difference in advertised interest rate. This page walks through each one.
Every lender has its own approach to assessing an investment application, including:
Because of this, one lender may approve an application that another lender declines outright and one lender may allow you to borrow hundreds of thousands of dollars more than another, for the exact same borrower and the exact same property.
The cheapest advertised rate is not always the lender that best supports your investment strategy. This is the single biggest misunderstanding we see among investors and it’s the reason lender selection matters as much as loan selection.
Borrowing capacity is usually the real ceiling on how large a portfolio you can build, not your deposit and not the interest rate. After helping Melbourne investors structure finance since 2008, we’ve seen borrowing capacity vary dramatically between lenders for identical borrowers.
Lenders calculate borrowing capacity using their own servicing model, which weighs up:
Because every lender weighs these differently, your borrowing capacity can vary enormously from one lender to the next. We calculate this across our panel before recommending a lender, so you know from the outset what’s realistically achievable, for this purchase and the next one.
One of the most common misconceptions we see is that having equity automatically means you can buy another property. It doesn’t.
Having equity and being able to service the additional debt are two separate tests and you need to pass both:
We assess both sides before recommending a strategy, so you’re not caught out assuming equity alone is enough.
Here’s a scenario we see often.
An investor buys their first investment property with a lender offering the lowest advertised rate at the time. Two years later, the property has grown in value and they want to use the equity to buy a second investment property.
The problem: the original lender only counts 70% of rental income in its servicing calculator, applies a strict interest-only policy and cross-collateralises the new loan against the existing property by default. Combined, these policies mean the investor’s borrowing capacity with that lender is tens of thousands of dollars lower than it would have been elsewhere and the cross-collateralisation makes it harder to sell or refinance one property without affecting the other.
Had the loan been structured with a lender better suited to rental income treatment and future flexibility from the start and kept separate from the existing home loan, the same investor could have moved straight into their second purchase, with each property standing on its own security.
This is the core of what we mean by lending strategy: the decisions made on property one directly shapes what’s possible on properties two and three.
How your loans are structured today affects your flexibility for years to come. We regularly help investor’s structure lending to:
All investor’s circumstances are different, which is why structure should reflect both your current purchase and where you want your portfolio to be in five or ten years. Much of our work involves restructuring existing lending so investors have greater flexibility for future purchases.
There’s no universal answer; it depends on your strategy.
Interest-only (IO) repayments cover only the interest for an agreed period, which can improve short-term cash flow and support some investment strategies, but total interest costs are typically higher over the life of the loan and the debt isn’t reduced during the IO period.
Principal & interest (P&I) repayments reduce both the loan balance and interest from day one, lowering total interest costs and building equity faster, but they come with higher monthly repayments.
Rather than defaulting to one option, we walk you through the trade-offs for your specific situation, cash flow, future borrowing plans and your accountant’s advice on your personal circumstances, before recommending a structure.
Most investors assume all banks assess investment applications more or less the same way. They don’t. Lenders differ significantly in how they treat:
Selecting the right lender for your specific situation can materially improve both your borrowing capacity today and your ability to keep investing in the future. This is where an investment lending specialist earns their place, matching your circumstances to the lender policy that works in your favour, not against it.
We regularly see investors run into avoidable problems, including:
Most of these mistakes aren’t visible until an investor tries to buy their second or third property, by which point the options are more limited and more costly to fix.
Your investment lending should be reviewed regularly, not set and forgotten. Many borrowers stay with the same lender for years without realising that their circumstances, the property’s value, or the lender’s pricing have changed.
Refinancing may help you:
Refinancing should never be based on interest rate alone. We weigh the savings against refinancing costs, lender policy and your long-term investment strategy before recommending a change. Learn more about refinancing.
Since 2008, What If We Finance has helped Melbourne investors finance their first investment property and structure larger portfolios as their portfolios have grown. Led by award-winning broker Spiro Kolokithas, we’re recognised with the MFAA Customer Service Award for Victoria and backed by 311+ five-star Google reviews, a track record built specifically on getting complex lending decisions right.
We don’t simply compare rates. We help investors understand:
Our role is to make sure your lending supports your investment strategy, not works against it, three properties from now.
Book a Free 30-Minute Meeting | Call 03 8804 1354
Many investors contribute between 10% and 20% of the purchase price plus purchasing costs, although this varies depending on the lender, your financial position and whether Lenders Mortgage Insurance applies.
Potentially. If you have sufficient usable equity and enough borrowing capacity to service the additional debt, you may be able to fund some or all of the deposit and purchasing costs through an equity release. Usable equity and total equity are not the same thing. We assess both before recommending this path.
It depends on your investment strategy, cash flow needs and long-term objectives. Interest-only loans can improve short-term cash flow but generally increase total interest over the life of the loan compared with principal-and-interest loans.
Yes. Different lenders apply different servicing models, rental income calculations and interest-only policies. Choosing the right lender can significantly affect both your borrowing capacity today and your ability to expand your portfolio in the future.
Cross-collateralisation happens when two or more properties are used as security for one or more loans. It can limit your flexibility to sell, refinance or borrow against a single property independently, which is why we generally aim to avoid it when structuring investment lending.
Lenders apply different servicing calculations, interest rate loadings and policy settings to investment loans, including how rental income is treated and limits on interest-only lending. This is why an investment-specific lending strategy matter.
Whether you’re buying your first investment property or planning your next acquisition, the right lending strategy can make a significant difference to your long-term success.
Before committing to a lender, understand your real borrowing capacity, your usable equity and the lender’s policies that will support your investment goals, not just today, but for the purchases still to come.
Speak with the investment lending specialists at What If We Finance and let’s structure your finance with your next property purchase in mind.
Book a Free 30-Minute Meeting | Call 03 8804 1354
This article is intended for general information purposes only and does not constitute financial advice. Please speak with a licensed mortgage broker or financial adviser regarding your personal circumstances.
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