Investment Property Loans for First and Portfolio Investors
Start or grow your property investment portfolio.
Investment loans are property loans arranged to buy a property you intend to rent out or hold for capital growth over time. Whether you are buying your first investment property, drawing on equity in your home or adding to an established portfolio, Oakwood compares suitable options from a range of lenders and helps you plan the structure before you buy. All lending is subject to lender assessment.
Why Oakwood / Role of a Broker
As a broker, we provide guidance and support tailored to property investors, from a first investment property through to a portfolio held across several lenders. Our services include:
- Market knowledge: we keep across the investment lending policies of 70+ lending partners, so you can see which options may suit your position.
- Personalised service: by understanding your goals, cash flow and existing commitments, we identify options aligned with your requirements.
- Structure and planning: we discuss ownership and loan structure with you before you buy, and work alongside your accountant or adviser where you have one.
- Application process: we prepare and lodge your application with the lender, with the documentation in order and in line with that lender’s requirements.
- Ongoing support: from the lender’s initial assessment through to settlement and beyond, we remain your point of contact, including when an interest-only period or fixed rate is due to end.
If you are ready to take the next step, speak to our team.
Key features
- Your first investment property: many investors draw on equity in their home for the deposit and costs, with a separate loan against the new property. We help you understand how lenders commonly assess that position before you make an offer.
- Building a portfolio: how the first loans are set up affects how far you can go. Keeping each property on its own loan, and considering more than one lender, can keep future decisions in your hands rather than a single lender’s.
- Repayment type: interest-only repayments, for example, can support cash flow during the holding period, while principal and interest repayments reduce the balance over time. Many lenders limit interest-only terms and assess them differently, so it is worth weighing with us and your accountant before you commit.
- Ownership structure: property may be held in your own name, jointly, through a trust or company, or within a self-managed super fund. Each has different lending and tax consequences. We arrange finance to suit the structure you and your accountant choose, including SMSF lending.
Considerations
- Cash flow: lenders commonly count only a portion of rental income and assess repayments at a rate above the actual one. Allow for vacancy, rates, insurance, management and maintenance when working out what the property costs to hold.
- Pre-purchase planning: knowing your likely borrowing position before you look means you can act on a property with clarity. Our calculators are a starting point; a conversation with us gives a fuller picture.
- Costs and fees: interest rates, establishment, valuation and ongoing fees and any lenders mortgage insurance affect your return and vary between lenders.
- Tax and your accountant: interest on an investment loan may be deductible and the ownership structure can affect your tax position. We do not give tax advice; we work with your accountant so the loan supports the advice they give you. All lending is subject to lender assessment.
Structure decides how far you get
One investment property is a transaction. Three is a structure. The difference between an investor who stalls at two and one who keeps going is rarely income alone: it is how the first two were set up.
The structure that commonly stops portfolios
Cross-collateralisation. The lender takes both properties as security for both loans, often because it was the simplest arrangement at the time and the consequences were not explained. From then on, many decisions need that lender’s consent: selling one commonly means they reassess the whole position, refinancing one away is rarely clean, and the equity in the stronger property quietly supports the weaker one. Standalone loans, one security each, keep more doors open. Structuring choices can involve costs, however (for example valuation, discharge or establishment fees), depending on the lender and the extent of any restructure, and we set those out before you decide. Where a client has a cross-secured position, looking at whether it can be separated is often worthwhile, subject to each lender’s policy and assessment.
How lenders commonly read investment income
Many lenders count only part of the rent and assess repayments at a rate above the actual one. Across several properties those two adjustments compound, which is why an investor who feels they can afford a fourth property may be told no. Lenders differ considerably here: how they treat negative gearing, whether they use actual or benchmark living expenses, how they assess debts held with other banks. Moving a portfolio to a lender whose policy suits its shape can materially change assessed capacity without your income changing, subject to that lender’s assessment.
Interest-only, honestly
Interest-only repayments can support cash flow, and for an investment property the interest may be deductible (your accountant’s territory, not ours, and we work alongside them). What interest-only also does is defer the principal, so when the period ends the repayment steps up on a shorter remaining term. Plan the exit at the start. We diarise the expiry rather than letting the reversion be the reminder.
An illustrative worked example
An illustrative example of how a file like this can be approached. It is not a client outcome, and no result is implied. This is general information only, not credit assistance, a quote or a recommendation. Every structure depends on individual circumstances, lender credit policy and approval. Oakwood arranges credit through its lending partners; all lending is subject to lender assessment and approval.
Worked example · Building a third and fourth property. Splitting a portfolio across lenders to get moving again. Structure to consider: standalone loans, possibly across more than one lender.
The situation. An investor with a home and two investment properties, all with one bank, is told they have no capacity for a third. Their income has risen since the last purchase.
The complication. Everything is cross-secured with a single lender whose servicing model treats the existing portfolio conservatively and counts only part of the rent. Because all the securities sit together, that one lender’s view is the only view that exists.
What we would look at. Whether the securities can be separated so that each property stands on its own loan, and then whether two of them could be refinanced to a second lender whose assessment of rental income and existing commitments differs. Any equity released by the separation could be held in an offset rather than drawn, so it is available if needed.
What the example shows. Where everything sits with one lender, that lender’s assessment is the only one the borrower receives. Standalone loans generally leave more room to add to a portfolio, or sell down one property at a time, without one lender’s consent being needed each time. Each lender applies its own policy and decides for itself.
Before you buy the next one
Get the property investor guide or speak to us about the structure before you sign a contract.