A first purchase is mostly about deposit and income. A fourth is about how one particular lender treats the three loans you already have. Two lenders can look at the same portfolio and land hundreds of thousands of dollars apart, and neither of them is wrong. They’re applying different policies.
That’s the whole game at this end of the market. It’s also why the order you go to lenders in matters: the wrong one on the second purchase can quietly cost you the third.
So I’ll walk you through what each lender does to your numbers, tell you which way I’d go, and show you what it leaves for the purchase after this one.
What usually brings someone to this page
- You’ve been told you’ve hit your ceiling and you want to know whether that’s the market or just that lender.
- Your properties are cross-secured and you want to know what it’s costing you in flexibility.
- An interest-only period is ending and the repayment is about to change shape.
- You’re looking at a purchase in another state and the numbers only work under some lenders’ policies.
- You want to pull equity out of one property to fund the deposit on the next, and you’d rather get the structure right the first time.
What a lender is actually looking at
None of this is secret. It’s just rarely written down for the person it’s being applied to.
- How much of your rent actually counts
- Lenders discount rental income to allow for vacancy and costs. How big that discount is comes down to policy, and it varies. Across a portfolio, a few percentage points of difference compounds into a very different borrowing capacity.
- How your existing debt is assessed
- Your current loans aren’t assessed at the rate you’re actually paying. They’re loaded at an assessment rate, and some lenders load debt held elsewhere more heavily than their own. It’s usually the biggest number in a portfolio calculation, and the one borrowers are least often shown.
- Negative gearing and tax treatment
- Some lenders add back the tax benefit of a negatively geared property. Some don’t. Where your file falls in that split can decide the answer on its own. What your tax position should be is your accountant’s call, and I work with the figure they give you.
- Cross-collateralisation
- Whether your properties secure each other or stand alone. Standing alone is usually a bit more work up front and leaves you more room to sell, refinance or restructure later. I’ll set out both so you can choose with the trade-off in front of you.
- Interest-only, and what happens after it
- Most lenders assess an interest-only loan on the repayment that kicks in once the interest-only period ends, over whatever term is left. Which makes interest-only harder to qualify for, not easier. Better to know that now than to find out in a decline.
What I’ll ask you for
- A schedule of every property: value, current loan balance, lender, rate, loan type and expiry of any fixed or interest-only period
- Current lease agreements or a rental statement for each tenanted property
- Two years of tax returns, including the rental schedules
- Your most recent council rates and insurance notices
- What you want the portfolio to look like in three years. It changes which lender should get this file
What you get back from me
- A written borrowing position for this purchase, and a note on what it does to the one after it.
- The rental treatment and assessment rate each shortlisted lender applies, side by side.
- Whether the structure is cross-secured or standalone, in plain words, and what that means the day you want to sell one.
- The lenders I ruled out and the policy point that ruled them out.
- What I’m paid on this file, and by whom.
Questions worth asking any broker
Including me. If you’re comparing brokers, these five separate a file somebody has read from a file somebody has forwarded.
- What percentage of my rental income is this lender counting?
- What assessment rate are you applying to my existing loans, and is it different for debt held elsewhere?
- Will this structure cross-secure my properties, and what happens when I want to sell one?
- What does this purchase do to my capacity for the next one?
- Who pays you on this loan, and does it change by lender?
Nothing on this page is a recommendation to buy property, or a view on whether property suits you. That sits with you and your adviser. What I can tell you is exactly how a lender will read the portfolio you’ve already got.
A 30-minute call, no fee and no obligation. Commercial and specialist files may attract a fee, and I’ll tell you before any work starts.