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Investment property loans: how the bank sees your first one, or your fourth

Bayley Clarke · Mortgage broker on the road · Last checked 6 September 2026 · 8 min read

The one question behind every investment loan

This comes up a bit. Someone rings and says, we've got so much equity in our place, can't we just pull it out and buy an investment? And the honest version of the answer is: you can, as long as you can borrow it. Equity isn't cash sitting in the wall. The bank can't hand it to you. It can only lend it to you, secured against the house, and a loan is a loan. It has to be repaid, and the lender has to be satisfied you can repay it before a dollar moves.

You could have all the equity in the world. If the income isn't there to carry the new loan on top of the one you've already got, the equity is irrelevant. The house sets the ceiling on what you could borrow. Your income sets the floor on what you actually can. So the first thing any lender does with an investment purchase is exactly what it does with a first home: income in, expenses out, every existing repayment counted, the new loan added on top at a buffered rate, and a yes or a no on whether the whole lot still fits over thirty years.

The bit that's different from a first home is what goes on each side of that ledger. Rent comes in, but not all of it. Buffers go on, but on every loan you hold, not just the new one. And the property itself gets read as security in a way a home you live in doesn't. That's the terrain. Four moves, and every lender sets them differently.

The four things lenders do to an investment deal

1. They count the rent, then shade it. A property that "pays for itself" in your head is not the property the bank assesses. Most lenders count somewhere between 80% and 90% of the expected rent, a handful sit closer to 70% to 75%, and at least one counts nearly all of it. Short stay and holiday rental gets shaded harder again, and some lenders won't touch it at all. A few also cap rent at a percentage of the property's value, or say no more than half your total income can come from rent. The haircut isn't the bank being difficult. It's the bank pencilling in a vacancy and a repair bill. And if you're living rent free with family and buying an investment, most lenders add a notional rent to your expenses on top, because nobody lives in the spare room for thirty years. Evidence is a signed lease or a rental appraisal from an agent, and an appraisal generally gets shaded a touch harder than a lease.

2. They stack the buffers. The new loan isn't assessed at the rate you'll pay. It's assessed at that rate plus a buffer, around three percentage points at most lenders and closer to two at a few of the non-bank lenders. Then the same buffer goes onto every loan you already hold, including the home loan and any other investment loan, over whatever term is left on them. If a loan is interest only, most lenders assess the repayments as if it were principal and interest over the years remaining after the interest only period ends, which makes a five year interest only loan look more expensive on paper than it feels in your account. Whether a lender adds back any tax benefit from a negatively geared property, and at what rate, is another dial that moves lender to lender. Whether that benefit applies to your purchase at all changed in 2026 and depends on your contract date and whether the property is a new build, and that is squarely your accountant's question, not mine.

3. They read the security. Lenders price in LVR tiers: 80% of value is the standard mortgage, 70%, 60% and 50% sit below it with slightly sharper pricing, and 90% and 95% sit above it with lenders mortgage insurance or a fee in lieu. Most lenders will go above 80% on an investment purchase, a few cap investment lending a notch below where they cap owner occupied. The value that all of this hangs off is the bank's valuation, not the agent's appraisal, and lenders' valuers disagree with each other more than people expect. On the same home I've seen two lenders land nearly 10% apart. Then the type of property moves the dials again: vacant land sits happiest at 80% or under because it earns nothing, and rural acreage, tiny dwellings and unusual builds shorten the list of lenders that will play. On top of that most lenders carry a ceiling on how much they'll lend one borrower in total, so a fourth property can run into a cap that a first one never sees.

4. They read the structure. If the deposit is coming out of equity, the release itself has rules: how much you can take without proving what it's for, how high the LVR can go on a cash out, and what changes above 80%. Under 80% of value, most lenders will release a large amount on a stated purpose, but the no evidence caps run from about $100,000 at the tight end to $1 million or unlimited at the generous end. Above 80% the caps drop hard, a couple of lenders release nothing at all, and one lender on the panel treats equity release as an unacceptable purpose full stop. Then there's how the loans sit. One lender holding both properties as security for one loan is tidy for the bank and messy for you: it's called cross collateralising, and it means selling or refinancing one property drags the other into the valuation. Standalone loans, with the deposit released against the home and the purchase loan secured only against the investment, sometimes at two different lenders, keeps each property its own animal. And inside the investment loan, use an offset, not redraw. Redraw pays the loan down, and pulling it back out for a car turns that slice into a car loan sitting inside your investment debt. The tax treatment follows the money, not the account name.

Every investment question I get asked is one of those four moves in action. Which brings us to the part that actually changes outcomes.

Same equity, different lender, different answer

Here's the bit the online calculators can't show you: every lender sets those four dials itself. How much rent to count, how big a buffer, whether the buffer goes on your existing loans at their actual rate or a loaded one, how much equity comes out without paperwork, where the exposure ceiling sits. Same rules of thumb, wildly different settings.

The spreads are not small. Take $600 a week of rent on a place you're buying. At a lender counting 90% of it, that's about $28,000 a year of assessed income. At a lender counting 70%, it's about $21,800. Illustrative numbers, not a quote, but that's $6,000 a year of income appearing or vanishing on identical paperwork, and it flows straight through to how much the bank says you can borrow. Take the same person living at home rent free: a lender assuming $150 a week of notional rent counts roughly $7,800 a year of expense that never leaves their account, and a lender assuming nothing counts zero. Take a $110,000 equity release under 80%: no questions asked at most of the panel, quotes and contracts wanted at the lender with the $100,000 cap.

Then stack them. An investor on their third property, carrying two existing loans, gets every one of those loans buffered at most lenders and buffered lighter at a couple of the non-banks. The difference between the heaviest and the lightest treatment of the debt you already have can be the difference between a yes and a no on the next one, before anyone has looked at the property.

Which is why "can I get an investment loan" has no single answer. There is only what you can borrow at the lender you walk into. A branch can only ever offer you its own policy, and nobody in that building is going to mention that the lender down the road counts more of your rent and none of your notional one. Seeing across the whole panel at once is the job.

The questions, one by one

Each of these has its own full answer with the lender by lender pattern underneath it. Find your situation and go down a level.

What to bring, and the question to ask

You don't need a spreadsheet of suburbs. For nearly every investment conversation, the useful pile is: your current home loan statement, a rough idea of what your place is worth, a rental appraisal or lease for the property you're looking at, and your payslips or last two tax returns. With those, I can order free desktop valuations across a few lenders in a day and tell you which one is standing on the strongest number before anything is lodged.

Then the question to ask isn't "what's your rate" and it isn't "do you do investment loans". Everyone does investment loans. The question is "how do you count the rent, how do you treat the loans I've already got, and where's your ceiling". Those three settings move what you can borrow for the next property further than anything else on the application, and they only become useful when someone can see across a whole panel of lenders at once. That's the job.

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