What is an Investment Loan for a Unit Purchase?
An investment loan is finance secured against a property you intend to rent out rather than live in. Lenders assess your application differently to an owner-occupier home loan because they expect rental income to contribute toward repayments, and they price the risk of vacancy and maintenance differently. When you're buying a unit in Chermside, the structure, loan features and tax treatment all depend on whether you're purchasing the property as an investment or as your home.
The property investor loan market has changed significantly since July 2027. New taxation rules apply to most units purchased after May 2026, and lenders now assess your debt-to-income position more carefully than they did in previous years. If you're considering a unit near Westfield Chermside or in one of the newer complexes along Gympie Road, the lending environment matters as much as the property itself.
How Lenders Assess Investment Loan Applications for Units
Lenders assess your capacity to service the loan using a serviceability buffer of 3 percentage points above the product rate. They calculate repayments at a higher rate than you'll actually pay, which reduces the loan amount you can borrow. For investor lending, most lenders will include between 70 and 80 per cent of the expected rental income as additional income in the serviceability calculation.
Consider a buyer who owns their own home and earns $95,000 a year in salary. They want to purchase a two-bedroom unit in Chermside as an investment property. The unit has a rental appraisal of $550 per week. The lender includes $385 per week as rental income in the serviceability test, applies the buffer, and factors in the buyer's existing home loan repayments. The loan amount approved depends on how much breathing room remains after all commitments and the buffered rate are considered. That same buyer would likely qualify for a larger loan if buying the same unit as an owner-occupier, because owner-occupied lending carries a lower risk weighting and no rental vacancy assumption.
Lenders also apply a debt-to-income cap. Since February 2026, no more than 20 per cent of new investor loans at any lender can be written at a debt-to-income ratio of six times or more. If your total borrowing across all properties exceeds six times your gross income, your application may still be approved, but it sits within a portfolio limit that some lenders exhaust quickly.
What Deposit Do You Need for an Investment Unit?
Most lenders require a minimum deposit of 10 per cent of the purchase price for an investment property, meaning they will lend up to 90 per cent loan to value ratio. Borrowing above 80 per cent LVR triggers Lenders Mortgage Insurance, which protects the lender if you default. The premium is typically added to your loan amount and can range from a few thousand dollars to over $20,000 depending on the loan size and your deposit.
If you already own property, you may be able to use equity in that property as your deposit rather than providing cash savings. A broker can help you understand how much equity you can access and whether refinancing your existing loan to release equity makes sense for your circumstances.
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Interest Only or Principal and Interest Repayments?
Investment loan products usually offer a choice between interest only repayments and principal and interest repayments. Interest only means you pay only the interest charged each month, and the loan balance does not reduce. Principal and interest means each repayment includes interest and a portion that reduces the loan balance.
Interest only is common for property investors because it keeps the repayment lower, which can make the property cash flow neutral or reduce the amount of negative cash flow each month. Lenders typically offer interest only for a period of one to five years, after which the loan converts to principal and interest unless you request an extension. Not all lenders will extend interest only periods, and the decision often depends on your equity position and repayment history.
The interest you pay on an investment loan is generally a claimable expense, which means it reduces your taxable rental income. When the loan reverts to principal and interest, your repayment increases but only the interest portion remains deductible. The principal portion is not deductible but does increase your equity in the property.
Variable Rate or Fixed Rate for Investment Property?
You can choose a variable interest rate, a fixed interest rate, or a combination of both. Variable rates move with the market and with the lender's pricing decisions. Fixed rates lock in the rate for a set period, usually between one and five years. Investment loan interest rates are typically higher than owner-occupier rates for the same product, reflecting the higher risk lenders assign to investment lending.
Variable rate investment loans usually offer more flexibility. You can make extra repayments, access redraw or an offset account, and refinance without paying break costs. Fixed rate loans provide certainty over repayments but restrict extra repayments and charge break costs if you exit the loan early. If you think you may want to access equity or sell within a few years, a variable rate or a short fixed term may suit you better.
Some investors split their loan between fixed and variable. This approach provides partial rate protection while maintaining access to flexible features on the variable portion. It also means you're not making a single bet on rate direction.
Negative Gearing and the Changes from July 2027
Negative gearing occurs when your property expenses, including interest, body corporate fees, insurance, repairs and depreciation, exceed your rental income. Under the old rules, that loss could be offset against your salary or other income, reducing your overall tax.
From 1 July 2027, residential investment properties purchased after 7:30pm on 12 May 2026 are subject to quarantining rules unless the property is an eligible new build. Net rental losses on affected properties can only be offset against other residential rental income or carried forward to offset future rental income or capital gains. You cannot offset the loss against your wage or salary.
Units purchased in Chermside before that cut-off date continue under the old rules. If you bought a unit in an established complex on Rode Road or Kingsford Smith Drive before mid-May 2026, or if you had a signed contract before that date, the property remains eligible for traditional negative gearing until you sell it.
If you're purchasing now and the unit is not a newly constructed dwelling on previously vacant land, your rental losses will be quarantined. You can still claim all the same expenses, but the benefit is deferred until you have rental income or a capital gain to offset it against. This changes the cash flow equation and the after-tax cost of holding the property, particularly in the early years when interest costs are highest.
Why Unit Features and Body Corporate Matter to Lenders
Lenders assess units differently to houses. They look at the size of the unit, the total number of units in the complex, the condition of the building, and whether the body corporate has adequate funds in its sinking fund. Units below 50 square metres are considered higher risk by some lenders, and a few will not lend on units below 40 square metres at all. Serviced apartments and properties with hotel-style management agreements are typically excluded.
Chermside has a mix of older low-rise complexes and newer mid-rise developments, particularly around the Westfield precinct. If you're looking at a unit in a large complex, ask whether the body corporate has any special levies planned or any structural issues on record. Lenders will request a body corporate certificate as part of the application, and any red flags in that document can delay or derail approval.
Strata title is standard for units, but company title and community title structures exist in some older buildings. Most lenders prefer strata title. If the title type is unusual, check lending policy before making an offer.
What Happens at Settlement and After
Once your investment loan is approved and contracts exchange, your lender will arrange settlement. You'll need to pay stamp duty before or at settlement. Queensland charges stamp duty on investment properties at the standard rate with no concessions. You'll also pay legal fees, loan establishment fees if applicable, and any LMI premium that was not added to the loan.
After settlement, you'll need to arrange landlord insurance, notify your lender and insurer of the property address, and ensure the property is tenanted or advertised for rent. Lenders expect investment properties to be rented. If the property remains vacant for an extended period, the lender may ask questions, particularly if your loan was approved with rental income included in serviceability.
You can claim most costs associated with holding the property, including interest, body corporate fees, council rates, landlord insurance, property management fees, repairs and maintenance, and depreciation. You cannot claim the principal portion of your repayments or capital improvements, though capital improvements may increase your cost base for capital gains tax purposes when you eventually sell. Keep records of every expense and talk to an accountant who understands the current rules.
How to Access Investment Loan Options from Multiple Lenders
Different lenders assess investment lending differently. Some have lower serviceability buffers for existing customers. Some include a higher percentage of rental income. Some are more willing to lend on small units or units in large complexes. Policy also changes frequently in response to regulator guidance and portfolio targets.
Working with a mortgage broker gives you access to investment loan options from banks and lenders across Australia without needing to apply to each one individually. A broker can compare interest rate discounts, loan features, LMI premiums, and serviceability outcomes across multiple lenders and recommend a shortlist suited to your situation. They can also help you understand how an investment loan fits within your broader property investment strategy, particularly if you plan to build a portfolio over time or use equity for further purchases.
If you're weighing up whether to buy a unit in Chermside or another suburb, whether to fix or stay variable, or whether the numbers still make sense under the new tax rules, a conversation early in the process can save time and money. Call one of our team or book an appointment at a time that works for you.
Frequently Asked Questions
What deposit do I need to buy an investment unit in Chermside?
Most lenders require at least 10 per cent of the purchase price as a deposit for an investment property. Borrowing above 80 per cent LVR will trigger Lenders Mortgage Insurance, which can add thousands to your loan amount.
Can I still negatively gear an investment unit purchased in Chermside now?
If you purchase an established unit after 12 May 2026, rental losses are quarantined and can only offset other rental income or future capital gains, not your salary. Units purchased before that date or eligible new builds retain full negative gearing benefits.
How much rental income do lenders include in serviceability?
Most lenders include between 70 and 80 per cent of the expected rental income when calculating how much you can borrow. This accounts for vacancy periods and maintenance costs.
What loan features should I look for in an investment loan?
Look for interest only options to manage cash flow, offset or redraw facilities if choosing variable rate, and the ability to make extra repayments without penalty. Some lenders also offer rate discounts for larger loans or existing customers.
Do lenders have different policies for units compared to houses?
Yes. Lenders assess unit size, the total number of units in the complex, and the body corporate's financial position. Units below 50 square metres may attract higher rates or limited lender appetite.
