Investment Loans

Investment loans add a bit more complexity to the home loan application process. Typically, this is because you should consult your financial planner or accountant given there are different ways to structure the purchase and is it’s often a property that you hold for a longer term than one would an owner occupied one given the tax implications.

Charter Finance’s CEO, Dean Perlman is of the view that “the purpose of buying investment properties is clearly to build wealth. There are however numerous strategies involved in making sure this is executed effectively. The banks will set you on a particular direction which may not be the best one for you, so we highly recommend speaking to your advisers first as even the way you repay your loans can have a significant long-term effect on your property’s ROI.

At Charter Finance, our mission is to ensure every dollar that our clients work so hard for and then invest into property, does its hard work to then redeliver the best return for our clients”.

Qualifying for a loan

The general lending criteria are:

  • You should have 5% – 10% in ‘genuine’ savings (genuine savings is defined differently by lenders but typically is defined as the funds that an applicant has saved themselves gradually over time. Generally speaking, lenders require at least 5% of savings in the applicant’s account over a three-month period prior to application.
  • A good credit history.
  • A healthy credit score.
  • Stable employment.

How to improve your borrowing capacity

The following are some tips to be maximise your borrowing capacity:

  • Ensure all your existing credit are paid on time with no dishonours showing;
  • Reduce your credit card limits;
  • Do not apply for any other credit (be it cards, cars in the months leading up to applying for a loan);
  • Apply for joint loans if need be;
  • Fix your rate for three to five years (see below).

Banks credit departments all have different ways of assessing income, which include variances in the percentages they will adopt, example:


Your living expenses and existing credit make a significant difference in how much you can borrow. You may need to reduce your discretionary spending in order to maximise how much you can borrow.

Rental income

Most banks use 80% of rental income while some will use 100%

Other income

Banks assess PAYG salaries in the same way but apply different percentages for other types of income, including dividends, distributions, bonuses, self-employed add backs, overtime etc

Negative gearing

Only some lenders will take the negative gearing benefit into account which can add a significant amount of additional borrowing.

Assessment rates

In 2019, APRA changed the way banks needed to assess a borrower’s capacity to repay a loan. Lenders use different assessment rates and therefore off the same income, will lend different amounts.

Based on the above you will have noted that there are numerous items to consider and we highly recommend calling us to discuss your particular circumstances.

Charter Finance

Find out if you qualify

Get in touch with Charter Finance today and let us chart this journey with you!