Investor lending policy: what changes your borrowing capacity?
From rental income shading to existing limits, learn how lenders can assess the same portfolio differently.
Rental income is usually assessed conservatively
A lender may use only part of verified rent to allow for vacancies, management fees and property costs. The acceptable evidence and percentage used vary by lender and property type.
Existing loans are recalculated
The repayment shown on a statement is not always the amount used in servicing. Lenders may apply assessment rates, principal-and-interest assumptions or different treatment to interest-only debt.
Limits and living expenses still matter
Credit-card limits, personal debts and household expenses reduce available servicing even when accounts are rarely used. Dependants and owner-occupier housing costs are also part of the overall assessment.
Structure should support the longer plan
Borrowing capacity is only one part of an investment decision. Cash flow, buffers, loan purpose, tax advice and future purchases should be considered before choosing a structure.
- Prepare current rent evidence.
- List every loan balance, limit and repayment.
- Test higher-rate and vacancy scenarios.
- Seek tax advice on deductibility and ownership structure.
Important information
This article provides general information only and does not take your objectives, financial situation or needs into account. Lending policies and government programs can change. Seek personalised credit assistance before acting.