Property investor? Start with the numbers.
Understand the cash you need, the loan checks and the costs of owning an investment property.
General lending information only. This is not a recommendation to invest or a loan offer. Property investment carries risk.
Before you commit, separate the property price from the full cash needed at settlement. Then test the loan against vacancy, repairs and changes in household income.
The property is only half the decision
What pre-approval tells you
It indicates what you may be able to borrow. The lender still needs to accept the property, valuation and final application.
Before signing
Get advice on your finance condition, deadlines and required notices. Pre-approval does not give you a right to cancel. In WA, there is no mandatory cooling-off period. If finance is delayed or declined, contact your solicitor or settlement representative promptly. The contract does not necessarily end automatically.
Your contract deposit counts towards your total contribution
Your contract sets the deposit, due date and who holds it. It is negotiated, not automatically 10%. This payment counts towards the purchase price, not on top of it. The lender separately decides the loan amount. Allow for the remaining price, buying costs and a cash buffer.
See how a contract deposit fits into the purchase
A valuation gap can change settlement
On a $600,000 purchase you may plan for a $480,000 loan. If the lender values the property at $550,000 and applies an 80% LVR, the loan becomes $440,000. That creates an extra $40,000 gap before buying costs.
The lender must accept the property
Very small apartments, serviced or student accommodation, unusual titles and mixed-use property can have tighter lending rules. Check the address and property details before relying on a borrowing estimate or bidding without a finance condition.
See how rent and costs add up
Gross rent does not deduct vacancy, loan repayments or property costs. Put them on the same page before you decide what the household can carry.
The repayment below is a hypothetical input. It is not a loan quote, advertised repayment or investment forecast.
Two weeks vacant
- Rent: $600 × 50 weeks
- $30,000
- Loan repayments: $3,000 × 12
- $36,000
- Estimated property costs
- $8,000
Four weeks vacant and higher costs
- Rent: $600 × 48 weeks
- $28,800
- Loan repayments: $3,000 × 12
- $36,000
- Estimated property costs
- $10,000
The $8,000 and $10,000 are assumed annual property costs, not quotes or recommended budgets. For your property, add up the ongoing costs listed in the costs FAQ and use repayments based on your loan proposal. These examples exclude buying and selling costs, loan fees, income-tax effects and major works. They show cash shortfalls, not investment profit or loss. Both use $3,000 monthly repayments. Also test the repayment after a rate rise or the end of an interest-only period.
Does it work for your budget and the lender?
Once you have allowed for repayments, property costs and a buffer, the next step is understanding how a lender may assess your plans.
Lenders may use only part of the expected rental income and will also consider your other income, debts and ongoing commitments. A borrowing calculator can give you a starting point, but it cannot confirm what you will be approved for.
Bring your figures and the property details to me. We can look at the lender requirements and what needs checking before you make an offer.
Loan features to check
Compare repayments now, repayments later and the total cost over the loan term.
What happens after interest-only?
Interest-only repayments do not reduce principal during that period. When principal and interest begins, the balance is usually repaid over the shorter remaining term. Ask for the repayment during both periods and the total amount payable.
Did the refinance restart the clock?
A longer term can reduce the monthly repayment while increasing total interest. Include discharge, application, possible LMI and break costs. A refinance still depends on current valuation and borrowing capacity.
Is the offset linked to the right loan?
Check the link after settlement, refinancing or a product switch. If the statements do not show the expected interest benefit, ask the lender to confirm the linked account. ASIC explains why this check matters.
Before you buy, get clear answers
I can help with the lending questions. Contract, ownership, building, strata and tax matters belong with the appropriately qualified professional.
- What is the total cash needed at settlement?
- What if the valuation is lower than the price?
- What if rent stops or costs rise?
- What repayments apply after any introductory period?
- Which property secures each loan facility?
Short answers before you go further
The lender, property and full application still determine the outcome.
Do I need a 20% deposit?
Not in every application. The minimum deposit and any LMI depend on lender criteria, the property and the application. LMI protects the lender, not the borrower. Buying costs and a cash buffer need separate funding.
How much cash should I keep after settlement?
There is no standard amount. Consider vacancy, maintenance, an insurance excess and changes in household income. Money already allocated to rates or known bills is not the same as an emergency buffer.
Will the lender count the rent?
A lender may include part of verified rental income. The amount used can be reduced to allow for vacancy and property expenses. Evidence requirements and assessment methods vary.
Interest-only or principal and interest?
Principal and interest reduces the balance. Interest-only does not reduce principal during that period and required repayments may rise later. Ask for both repayment periods and the total cost before deciding.
Which costs should I include?
Separate buying costs from ongoing costs. Buying costs can include stamp duty, legal or settlement fees, inspections, government registration charges, loan fees and lenders mortgage insurance if required. You may also need to pay adjustments for prepaid rates or other property charges at settlement. Ongoing costs can include council and water rates, building and landlord insurance, property-management fees, repairs, maintenance and strata levies. Check whether land tax applies. Add loan repayments and keep a separate buffer for unexpected bills or periods without rent. Use property-specific quotes rather than a standard percentage.
Bring the questions before you commit.
Bring your current loan details and a rough purchase budget. I can explain loan structures, application requirements and options available through the lenders I am accredited to use after understanding your circumstances.
Liran Morris, Mortgage Matrix Broker.
Helping clients Australia-wide.