Simple hacks to start investing in property

Self-employed company directors face a different serviceability assessment than salaried employees when applying for an investment loan.

Lenders typically assess your income using two years of company financials and personal tax returns, not your most recent BAS statements or current cash flow. That creates a timing challenge: the income assessed for your loan is historical, while your deposit and borrowing capacity need to align with what you're planning to buy today. Understanding how lenders calculate your income, how much deposit you'll actually need, and which loan structure supports both tax efficiency and long-term portfolio growth makes the difference between getting approved and refinancing within twelve months.

How lenders assess your income as a company director

Lenders add back your salary, dividends, and any retained profits they consider distributable, then average that figure across two financial years. If your accountant has structured your income to minimise personal tax, your assessable income for borrowing purposes might be lower than what you could actually service. In our experience, directors who've recently reinvested heavily in the business or carried forward losses can find their borrowing capacity constrained even when cash flow is solid. Some lenders allow you to include the current year's income if you're partway through the financial year and can provide management accounts, but that's lender-specific and usually requires a full profit and loss statement signed by your accountant.

Structuring your deposit without triggering a cash flow gap

Most lenders require a minimum 10% deposit plus costs for an investment property, though some will lend at 90% LVR if you pay Lenders Mortgage Insurance. A more conservative approach is to target 20% to avoid LMI entirely, which can add several thousand dollars to your upfront costs. Consider a director purchasing at Sydney's current median who plans to use a combination of genuine savings and equity from an existing owner-occupied property. If the existing property has sufficient available equity, you can structure the deposit as a top-up against that security rather than liquidating company savings or triggering a dividend distribution. That keeps your company cash flow intact and avoids creating a personal tax event in the same financial year as the purchase.

Interest-only versus principal and interest for tax efficiency

Interest-only repayments on an investment loan allow you to maximise your annual tax deduction because the entire repayment is typically claimable, assuming the property is genuinely income-producing. Principal and interest repayments reduce your loan balance, which can be useful for long-term equity growth, but only the interest component is deductible. The decision depends on whether your priority is cash flow in the early years or accelerated equity build. In our experience, directors with variable income prefer interest-only terms during the first five years to keep repayments predictable, then switch to principal and interest once the property has appreciated and rental income has increased.

How the 2026 Budget changes affect new purchases

If you purchased an established residential investment property after 12 May 2026, both negative gearing deductions and the capital gains tax discount will be restricted from 1 July 2027. Losses from that property can only be offset against other residential property income or capital gains, not against your salary or company distributions. Excess losses carry forward, so the deduction isn't lost, but the immediate tax benefit is deferred. If you're considering a new build, you retain the option to choose between the previous 50% CGT discount or the new inflation-indexed method, whichever is more favourable at the time of sale. That makes new builds more attractive from a tax perspective if your investment strategy relies on negative gearing in the accumulation phase.

Variable versus fixed rates for investor loans

Variable rates give you the flexibility to make additional repayments or access offset accounts, which can be useful if you plan to pay down the loan faster or if your income fluctuates throughout the year. Fixed rates lock in your repayment amount, which can help with budgeting, but most fixed-rate products don't allow extra repayments beyond a small annual cap and don't come with offset accounts. Many lenders offer split loans, where you fix a portion of the balance and leave the rest on a variable rate. That gives you some certainty on repayments while retaining the flexibility to redraw or offset against the variable portion. For directors with irregular income distributions, the variable portion can act as a buffer during quieter quarters.

Using equity to fund your next purchase without selling

Once your investment property has increased in value, you can access that equity to fund a deposit on a second property without selling the first. Lenders will typically allow you to borrow up to 80% of the property's current value, meaning if the property was purchased at $800,000 and is now worth $900,000, you could access up to $720,000 in total lending against that security. If your existing loan balance is $640,000, that leaves $80,000 in usable equity, which might cover a 10% deposit and costs on a property in the $600,000 to $700,000 range. The lender will reassess your income and borrowing capacity each time you apply, so your most recent financials need to support the additional debt.

Choosing a loan structure that supports portfolio growth

If you plan to acquire multiple properties over time, avoid cross-securitising your loans unless absolutely necessary. Cross-securitisation means multiple properties are held as security for a single loan facility, which can make it difficult to sell one property or refinance later without restructuring the entire loan. Standalone securities give you the flexibility to sell, refinance, or restructure each property independently. Some lenders require cross-securitisation when your LVR is above 80%, but if you're borrowing at or below that threshold, request separate loan splits tied to individual securities. Your broker can structure this from the outset so you don't need to refinance later to separate them.

What to prepare before you apply

You'll need two years of company financials, two years of personal tax returns, recent BAS statements, a current profit and loss statement if you're midway through the financial year, proof of deposit, and a rental appraisal for the property you're purchasing. If you're using equity from an existing property, the lender will also require a current valuation, which they'll usually organise. If your company structure includes a trust or multiple entities, be prepared to provide financials for each related entity, as lenders will assess the consolidated position. The more documentation you can provide upfront, the faster the assessment process.

Call one of our team or book an appointment at a time that works for you. We'll review your company financials, assess your borrowing capacity across multiple lenders, and structure your investment loan so it supports both your immediate purchase and your longer-term portfolio strategy.

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