Investment lending

Getting an idea of how much you can borrow is the first step to buying an investment property. You’ll get a general idea of your price range, so you can narrow your property search within your budget.

When assessing how much you can borrow, we’ll take into account the potential rental income you will get.

Generally, you’ll need a 30% deposit. This may be from either cash, leveraging the equity in the home you live in or another property you own.

Before you enter into negotiations for any property, ask questions like

• Has it been rented before?
• How much was it rented for?
• Have there been any vacancy periods?
• How long it was vacant for, and why?

Once you’ve found the ideal investment property, you’ll need to organise the relevant insurance, for example building and landlord protection. You may also want to organise a property management service to manage the tenancy on your behalf. This is especially helpful when you live in a different region to your investment property.

1. Is the property in a location that will be easily tenanted?

Small towns can offer up enticing property prices for investors, but you'll need to weigh up if you'll be able to keep the property tenanted if there are limited work opportunities in the area.

2. Is the property suitable for people living in the area?

A one bedroom zoned in a popular school zone may not be as appealing as a four bedroom family house. Local real estate agents can provide information on the demographics of certain areas and knowledge on what properties are being tenanted quickly.

3. Are there any future developments planned for the area?

A new school, transport option or conveniences such as supermarkets can all play a role in keeping your property easily tenanted, and help to determine the rental prices you can get. Developments can also hinder investments - such as highways/motorways being built close by so it's important to be well informed on council plans too.

The brightline test is used to determine if you are required to pay tax on the profit when you buy and sell a property. If you own more than one property, only one is able to qualify as your main home. Any other properties you own would be subject to the brightline test when you choose to sell.

The LVR restrictions may impact on your ability to purchase an investment property. If you’re buying an investment property secured with a mortgage, you will need a deposit of at least 30%.

House insurance for landlords gives you peace of mind when renting out your property. Our partnership with Tower means you have access to landlord’s insurance to suit your needs and budget.