An investment loan isn’t the same animal as a home loan — even when it comes from the same lender. The structure matters more, because the way you set it up affects your cash flow, your tax position, and how easy it is to grow a portfolio over time.
We help investors get the structure right from the start — or unpick a structure that’s causing headaches down the track.
Structuring for cash flow and tax
Two decisions shape most investment loans:
Interest-only vs principal & interest
Interest-only (IO) keeps your monthly repayments lower, which can free up cash flow for other things — including paying down your non-deductible home loan faster. Principal & interest (P&I) builds equity in the property but costs more each month. Which one suits you depends on your whole financial picture, not just the property.
Whose name the loan is in
Individual, joint, company, trust, or self-managed super fund (SMSF) — each has different tax and borrowing implications. We can talk through the broad trade-offs, but the final call on structure should always be made with your accountant or a specialist adviser. We work alongside them, not instead of them.
Cross-collateralisation: the trap to avoid
Cross-collateralisation is when one lender holds multiple properties as security for multiple loans. It can look tidy on paper, but it ties your properties together — so selling one, refinancing one, or accessing equity becomes a negotiation with the lender about all of them.
Where it makes sense, we’ll often recommend stand-alone loans: each property stands on its own security. It’s a bit more paperwork but a lot more flexibility down the track.
Growing a portfolio
If you’re planning to build a portfolio over time, the structure of your first loan sets the tone for the next three. Get it right early and adding property two, three, four is much smoother. Get it wrong and you can find yourself boxed in — unable to borrow against one property without revaluing and refinancing the lot.
We’re happy to sit down and plan two or three purchases ahead, even if you’re only buying the first one now.
What you’ll need
- Your most recent tax returns and notices of assessment.
- Rental statements if you already have a tenant (or a rental appraisal for a new purchase).
- Details of your existing loans and living expenses.
- Your accountant’s contact, if you’d like us to talk structure with them.
Ready to talk investment loans?
Grab a coffee with James and walk through the numbers before you commit. Get in touch with NFIS — and if you’re weighing two properties, try the loan comparison calculator to see how the repayments compare.
Estimates and general information only. Talk to James for advice tailored to your situation.