Understand how your equity could support an investment property.
Once your home loan and other debts are in order, an investment property may become something to consider. If and when you are ready, we help you understand your borrowing position and how the lending could be structured to suit your goals.
What’s different about investment lending.
Using your equity
Equity in your own home may be able to contribute towards the deposit for an investment property. We assess how much could be accessed responsibly without overstretching your household.
Rental income counts
Lenders typically include a portion of expected rental income when assessing borrowing capacity, and the percentage varies between lenders. This changes the assessment compared with a standard home loan, and we take it into account.
Loan structure matters
Interest-only or principal-and-interest repayments, offset accounts, and keeping investment and home loan debt separate are all structural decisions. How a loan is set up can affect your flexibility and the records your accountant works with at tax time.
Different rates and rules
Investment loans are often priced and assessed differently from owner-occupier loans. With a panel of more than 40 lenders, we look for a lender whose investor policy suits your plan.
Tax considerations, at a high level.
Investment property involves tax considerations, including negative and positive gearing, deductible interest and costs, depreciation and capital gains tax. These can affect the real cost of holding a property.
We structure the lending so your accountant has clear records to work with. Tax advice is provided by your accountant or a registered tax agent, not by us.
Please note: NRG Financial Services provides credit assistance, not tax or financial advice. Always confirm the tax treatment of any investment with a registered tax agent or accountant before you proceed.
A plan before a purchase.
Map your equity
We assess what equity may be available in your home and what that means for your deposit and financial buffers.
Set the borrowing limit
Taking expected rental income into account, we establish a sensible borrowing limit that supports your goals without overstretching you.
Structure the loan
We identify a suitable lender and loan structure, keeping investment and home loan debt separate.
Be prepared
With your numbers clear and pre-approval underway, you are better prepared to act when a suitable property becomes available.
Buying is one moment. What happens after matters more.
Interest-only periods end, interest rates move and life changes, as children become independent, retirement draws closer or a further property is considered. We review your lending as these things change, so it continues to suit you long after settlement, not only on the day you buy.
Ask us about our annual review when you are ready to discuss your lending strategy.
Questions to consider.
How much equity do I need?
It depends on your home’s current value and the balance of your loan. In some cases, equity can be used without drawing on your savings. We assess the realistic figure before you start looking.
Will this affect my home loan?
It can, depending on how the lending is structured. That is why we aim to keep investment and home loan debt separate wherever possible, so one does not complicate the other.
Interest-only or principal and interest?
It depends on your goals and your accountant’s advice on tax timing. We’ll lay out both clearly so you and your accountant can decide what fits.
What if the property is vacant for a period, or interest rates rise?
We build in a buffer so that a vacancy or an interest rate rise does not place you under pressure. It forms part of setting a sensible borrowing limit from the start, not an afterthought.
Do I need a new deposit?
Not necessarily. In some cases, equity in your existing property can be used instead of a separate cash deposit. We’ll assess what is realistic for your circumstances.
What if investing isn’t suitable for me right now?
Then we’ll tell you, and there will be no pressure to proceed. Not everyone is in the right position to invest at any given time, and we would rather say so at the outset than recommend lending that does not suit you.
Want to know more?
A conversation is a sensible place to start. We’ll look at your numbers personally and give you a clear view, whether that points to a change or to leaving your loan as it is.