Pillar guide
Investment property loans and structure. A plain-English guide.
Usable equity, cross-collateralisation, borrowing capacity and loan structure. Those four things decide whether you can buy again, and most of them are set before you start looking.
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Most investors stop at three properties. Structure is usually why.
The wall investors hit is rarely a lack of equity. It's serviceability, and a structure that was arranged one deal at a time without anyone considering the deal after it.
Put every property with one lender and that lender's appetite governs your entire portfolio. When they revalue conservatively, tighten policy or simply say no, you're stuck, and untangling it afterwards costs time you usually don't have.
The investors who keep going are rarely the ones earning the most. They're the ones whose lending was structured to preserve options.
Usable equity is not the same as equity
Total equity is your property's value less what you owe. Usable equity is what a lender will actually release, generally up to 80% of the value less the existing loan, without triggering LMI.
A property worth $950,000 with $480,000 owing has $470,000 of equity, but roughly $280,000 of usable equity at 80% LVR. The second number is the one that determines your next move.
Cross-collateralisation, and why it limits you
Cross-collateralisation means one lender holds multiple properties as security for multiple loans. It's convenient at the time and constraining afterwards.
Selling one property requires the lender's consent on the whole structure. Releasing equity requires their valuation on everything. And when you want to move a loan elsewhere, you may have to move all of it.
- Selling one property can require restructuring the whole facility
- One lender's valuation governs your total position
- Moving lenders becomes an all-or-nothing decision
- A single policy change can freeze your entire portfolio
How lenders assess investment borrowing
Rental income is shaded. Most lenders count 70–80% to allow for vacancy and costs. Existing loans are frequently assessed at buffered rates rather than what you actually pay. Negative gearing benefits are counted by some lenders and ignored by others.
This is why the same investor can be told two very different numbers by two lenders on the same day. It isn't inconsistency; it's policy.
Structuring to keep buying
Splitting lending across lenders, keeping securities standalone where practical, and choosing the order in which you approach lenders all affect how far the portfolio can go.
There are also ownership questions, including personal name, trust, company and SMSF, that carry tax and asset protection consequences. Those sit with your accountant and adviser; we structure the lending around the decision you make with them.
A worked example
- Existing property value
- $950,000
- Loan balance
- $480,000
- Total equity
- $470,000
- Usable equity at 80% LVR
- $280,000
- Indicative deposit + costs on next purchase
- $280,000
- Rental income counted by lender (80% of $620/wk)
- ~$2,150 / month
Illustrative only. Equity does not approve a loan. Serviceability is assessed separately, and lender valuations often differ from online estimates.
If you'd rather have someone work through this against your actual numbers, that conversation is free and there's no obligation attached to it.
InvestorsFrequently asked questions
Generally your property value multiplied by the lender's maximum LVR, less your current loan balance. Our usable equity calculator does the arithmetic, but the lender's valuation is the figure that ultimately counts.
Usually serviceability, cross-collateralisation, or an internal exposure limit. Another lender assessing the same file can reach a different conclusion, which is the entire argument for not having one lender hold everything.
Often, yes, but the cost and timing matter. It usually makes sense to do it as part of a purchase or refinance rather than as a standalone exercise.
Interest-only improves near-term cashflow and costs more over the life of the loan. The right answer depends on your position and tax circumstances, which is a conversation involving your accountant.
No. We're finance brokers. We don't advise on whether or what to buy, and we don't forecast property returns. We structure the lending behind the decision you've made.
This guide is general information only and does not take into account your objectives, financial situation or needs. It is not credit, financial, legal or tax advice. Consider its appropriateness to your circumstances and seek professional advice where relevant. Credit criteria, fees, charges, terms and conditions apply.
Run the numbers
Usable equity
What a lender may actually release from your property, which is not the same thing as your total equity.
Investment borrowing power
Capacity for the next purchase, with rental income shaded the way lenders shade it.
Rental yield
Gross and net yield on an investment property, with holding costs included.
Interest only vs P&I
The cashflow you free up now, and the repayment shock when the interest-only period ends.
The process
How it works.
Tell us what you're trying to do
A quick conversation gives us the context: your goal, your timeline and where you're up to.
We assess your position
We look at your circumstances, objectives and the lending options actually available to you across the lenders we have access to.
We structure the strategy
We identify an appropriate lending approach, and explain the trade-offs in plain English before you commit.
We handle the process
From application through to settlement, we stay involved and keep you updated.
Free guide
The Investor's Loan Structure Guide
Equity, structure and borrowing capacity
- How to work out your usable equity
- Cross collateralisation explained, and why it limits your options
- Structuring loans so your borrowing capacity survives the next purchase, and what the 2027 tax changes mean
- The investment loan features that actually matter
Other guides
- First Home BuyersFirst home buyer loans in Australia. The plain-English guide.
- RefinancingRefinancing your home loan. How it works, and when it's worth it.
- Complex Income & Premium Home FinanceHome finance for self-employed and complex-income borrowers.
- Business, Commercial & Asset FinanceBusiness and commercial finance. Funding growth without the cliff.
Ready when you are.
Three quick questions, then a director comes back to you within one business day. No obligation, and we'll tell you honestly if the answer is “not yet”.