Thinking about buying an investment property in Brisbane? You're not alone. Many Australians are looking to invest in real estate as a way to build wealth and generate passive income through rental returns. Whether you're eyeing a trendy apartment in South Brisbane, a family-friendly town house in the suburbs, or a stand alone dwelling with strong rental yield potential, understanding your investment loan options is crucial to making your property investment strategy work.
Understanding Investment Loans vs Home Loans
An investment property loan differs significantly from a standard home loan. Lenders view investment properties as higher risk because you're relying on rental income to help service the debt, and vacancy periods can affect your ability to make repayments. This means you'll typically face:
• Higher interest rates compared to owner-occupier loans
• Stricter borrowing capacity assessments
• Different loan to value ratio (LVR) requirements
• Potential lenders mortgage insurance (LMI) costs
At LBK Lending, we can help you access investment loan options from banks and lenders across Australia, ensuring you find a loan amount and interest rate that aligns with your investment goals.
Calculating Your Borrowing Capacity
Before you start researching property options, it's important to understand how much you can borrow. Lenders assess your borrowing capacity by examining:
• Your current income and employment stability
• Existing debts and monthly commitments
• Bank statements showing your spending patterns
• The expected rental income from your investment property
• Your deposit size and loan to value ratio
Most lenders will only count around 70-80% of expected rental income when calculating your borrowing capacity, as they factor in vacancy periods and maintenance costs.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at LBK Lending today.
Choosing Your Investment Property Type
The Brisbane property market offers various options for investment properties, each with different benefits:
Apartments: Often provide strong rental yields, particularly in inner-city locations with high tenant demand. They typically require lower entry costs but may have higher body corporate fees.
Town Houses: Offer a balance between apartment living and house features, often appealing to families and providing steady rental returns.
Stand Alone Dwellings: Usually provide stronger capital growth potential and attract long-term tenants, though they may require larger loan amounts.
When researching property options, consider factors like rental yield, capital growth potential, and the area's tenant demographics.
Investment Loan Features to Consider
When applying for an investment loan, you'll need to decide between several key features:
Interest Rate Options:
• Variable interest rate: Fluctuates with market conditions and may offer interest rate discounts
• Fixed interest rate: Provides certainty for budgeting and calculating investment loan repayments
• Split loans: Combine both fixed and variable portions
Other Important Features:
• Offset accounts to reduce interest charges
• Redraw facilities for accessing extra payments
• Interest-only repayment options during the initial period
• Line of credit facilities for building an investment property portfolio
The Application Process
The investment loan application process involves several steps:
- Pre-approval: Get conditional approval based on your financial situation
- Property selection: Find and secure your investment property
- Formal application: Submit complete documentation including property details
- Valuation and assessment: Lender assesses the property and your application
- Settlement: Complete the purchase and arrange property management
Having your bank statements, income documentation, and deposit funds ready will help create a more streamlined application process.
Tax Considerations and Negative Gearing
Many Brisbane property investors utilise negative gearing as part of their investment strategy. This occurs when your rental income is less than your property expenses (including loan repayments, rates, and maintenance), creating a tax-deductible loss.
Other tax considerations include:
• Stamp duty costs (which vary by state)
• Depreciation benefits on the property and fixtures
• Capital gains tax implications when selling
• Property management and maintenance expense deductions
Building Your Investment Property Portfolio
Whether you're purchasing your first investment property or expanding an existing portfolio, having the right lending partner makes a significant difference. Working with experienced mortgage brokers means you can access a wider range of lenders and find investment loan interest rates that suit your long-term goals.
Many successful investors start with one property and gradually build their portfolio using equity from their existing investments. This strategy requires careful planning and ongoing assessment of your borrowing capacity as your circumstances change.
Ready to start your property investment journey in Brisbane? The team at LBK Lending has the expertise to guide you through the entire process, from initial assessment through to settlement. We'll help you understand your options, compare lenders, and structure your loans to support your investment goals. Call one of our team or book an appointment at a time that works for you.
