An easy way investors can maximise total borrowing capacity

How to raise your maximum borrowing capacity

If you’re careful with your selection of lenders, you could greatly increase your borrowing power and grow your investment property portfolio quicker.

Finding the right financing is crucial for any property investor. The home loans you choose to fund your property purchases can mean the difference between the success and failure of your investment strategy, so you need to take plenty of factors into consideration when choosing a lender.

Many investment borrowers aren’t aware of the fact that they can significantly increase their borrowing capacity by carefully choosing lenders. By adopting a long-term approach and spreading your loans among a variety of lenders, you can maximise your borrowing power.

Each lender is different

Every Australian home loan lender has its own unique lending criteria and level of risk tolerance. This not only affects who a lender will offer financing to, but also how much it will let you borrow to purchase property.

When you apply for a home loan, you need to supply details of your employment, income, assets and liabilities. The lender then uses this information to determine your capacity to service a loan, as well as check whether you sit comfortably within the lender’s own acceptable risk parameters.

But because no two lenders are the same in the lending strategies they adopt, you will find that you may be eligible to borrow more from one lender than you would from others – even if your income, assets and liabilities are identical across each separate loan application. For example, Lender A may be willing to approve a loan of $500,000, while Lender B has a slightly more generous lending policy and approves a loan of $525,000. Meanwhile, Lender C has a more conservative approach to lending and will only approve a loan of $440,000.

As you can see, this can lead to substantial differences in how much you can borrow and by adopting a long-term diversified lending strategy, you can maximise your borrowing power and grow your investment property portfolio as quickly as possible.

Diversified lending structure for property investors

As a property investor, you can use the different lending policies of Australian banks to your own advantage. Instead of simply doing all your home loan borrowing with the one bank, diversifying your borrowing across a range of lenders could potentially double your borrowing capacity. This is done not only by choosing loans from multiple lenders instead of just one, but also by making sure you choose the right lender at the right time for someone in your financial position.

Let’s take a look at the example above, where Lenders A, B and C each offered a different borrowing capacity to the same borrower. If you chose a loan with Lender B, you could purchase a $400,000 investment property and still have $125,000 of funding left over before your borrowing power was maxed out.

But by splitting your investment borrowing between the three lenders, you could potentially borrow a much larger amount. For example, you could take out a home loan to buy your principal place of residence with a lender that specialises in offering affordable loans for first home buyers, but that also makes it easy to access the equity in your home at a later date. The first lender will typically be one with a stingy lending policy and that is unlikely to approve future loans when you already have debt to pay off.

When you’re ready to buy your first investment property, you can use the equity in your home to apply for a loan with a second lender, and potentially then borrow to buy a third investment property and so on. If you start out borrowing from banks with fairly strict lending policies and then borrow funds from lenders with a more generous lending approach, you can maximise the amount of financing you can access.

By adopting a considered, long-term approach, you might be surprised just how much you can increase your borrowing capacity. However, as this is quite a complex strategy, you’ll need help from a mortgage broker to make it work.

Benefits of diversified lending strategies

There are many benefits to diversifying your investment borrowing across a range of lenders, including:

  • Multiple lenders. You can access a higher level of financing by using multiple lenders instead of if you organise all your borrowing through just one lender.
  • Maximise borrowing power. By using the right lender at any particular point in time based on your individual financial circumstances, you can greatly increase your borrowing capacity.
  • Spread debt around. By using multiple lenders, you are not at the mercy of any one lender who may limit your future borrowing capabilities or stop you from accessing equity.
  • Build a bigger portfolio. With increased borrowing power, you can build a larger, more diversified portfolio of investment properties.

Talk to a mortgage broker

If you think a diversified lending approach could help you build your property portfolio, chat to a mortgage broker who specialises in investment borrowing. You’ll need the expert knowledge of a broker to help you understand the different practices and policies of each lender, and to know which lender is the best one to approach at any particular time. Just as your financial circumstances are constantly changing, lenders also regularly update their lending policies to reflect market trends and their own appetite for risk.

A mortgage broker will also be able to tell you whether borrowing from more than one lender is the most effective approach for someone in your financial situation, ensuring that you make the right decisions about financing your investment purchases.

You can compare mortgage brokers below.

Rates last updated November 15th, 2018
Details Features
Aussie Home Loans
Aussie Home Loans
Aussie is one of Australia's leading financial service providers, having won The Adviser’s Top Mortgage Broker award for the last 3 years. They charge no appointment fees and can meet at a time and place which suits you.
Up to 22 lenders Enquire Now More info
Yellow Brick Road
Yellow Brick Road
Yellow Brick Road has over 40 lenders on their panel, as well as their own competitive home loans. 40+ lenders Enquire Now More info
Mortgage Choice Home Loans
Mortgage Choice Home Loans
Mortgage Choice is one of Australia's largest independent broker services. They have over 28 lenders on their panel, including the big four banks. 28+ lenders Enquire Now More info
Finsure
Finsure
Finsure has loan offers from over 35 lenders, including major brands, and will work to find a home loan that suits your property needs.
Over 35 lenders Enquire Now More info
eChoice Mortgage Brokers
eChoice Mortgage Brokers
When you do business with eChoice you will be given your own home loan manager to help you select a loan. 25 lenders Enquire Now More info

Check out investment loans from across the market

Rates last updated November 15th, 2018
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Loan purpose
Offset account
Loan type
Repayment type
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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.89%
4.24%
$0
$0 p.a.
80%
Fix your rate and minimise repayments for 2 years with this interest-only investor mortgage.
3.99%
3.99%
$0
$0 p.a.
80%
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.
3.99%
4.13%
$0
$10 monthly ($120 p.a.)
80%
A competitive variable rate home loan with no application fee.
3.84%
3.91%
$0
$0 p.a.
80%
Get instant online approval and flexible repayment options with this fixed rate mortgage for investing.
3.79%
3.82%
$0
$0 p.a.
80%
An essentials variable investor mortgage with a high borrowing amount so you can fund a large purchase.
4.08%
4.13%
$600
$0 p.a.
90%
Fund your investment purchase and offset up to $15,000. Available with a 10% deposit.
3.99%
3.99%
$0
$0 p.a.
70%
Investors with a 30% deposit can get this low rate loan to fund their property portfolio. Take advantage of split and redraw facilities.
3.74%
3.79%
$499
$0 p.a.
80%
Competitive variable investor mortgage to fund your property portfolio. You can add a 100% offset account for just $10 a month.
3.93%
3.94%
$0
$0 p.a.
80%
This investment loan keeps fees low, has a sharp interest rate and comes with a 100% offset account.
3.99%
5.35%
$600
$0 p.a.
90%
Competitive rates for fixed for 3 years with redraw facility.
4.03%
3.92%
$499
$0 p.a.
80%
A competitive 3 year investor rate with principal and interest repayments. Optional offset account with a $10 monthly fee.
4.05%
4.22%
$0
$10 monthly ($120 p.a.)
90%
Lock in your interest rate on your investment property for 2 years. For a limited time you can earn double Velocity Frequent Flyer Points.
3.91%
3.92%
$0
$0 p.a.
80%
Investors can go from application to approval in as little as 20 minutes with this innovative online lender.
4.43%
4.28%
$600
$0 p.a.
90%
An interest only investor mortgage that lets you offset up to $15,000. Available with a 10% deposit.
3.98%
3.98%
$0
$0 p.a.
70%
Investors can get a 100% offset account and a low rate if they have a big deposit. 100% online application process.
4.09%
4.87%
$0
$395 p.a.
90%
Buy your investment property and set your repayments for the first year. Available in QLD, NSW and ACT only.
4.24%
4.00%
$0
$0 p.a.
80%
Buy an investment property and enjoy the certainty of a 3-year fixed rate with interest-only payments.
4.09%
4.40%
$0
$0 p.a.
70%
Forget about rate rises for two years and minimise your investment repayments with this interest only mortgage. Requires a 30% deposit.
4.54%
4.59%
$600
$0 p.a.
80%
An investment loan for new Heritage Bank customers. Low fees and interest-only repayments.
3.97%
3.99%
$0
$0 p.a.
80%
Package your owner occupied loan with investment loan and receive a discounted investment rate. 100% offset account included.
4.29%
5.33%
$0
$395 p.a.
90%
Lock in a competitive investment rate and combine your loan with a credit card and transaction account for extra savings. Package fee applies.
3.99%
4.62%
$395
$0 p.a.
80%
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.
4.29%
4.31%
$0
$0 p.a.
80%
Investors will pay no application or ongoing fees for this interest-only loan.
4.18%
4.18%
$0
$0 p.a.
80%
Investors get a 100% offset account and pay no application or ongoing fees on this loan from an innovative online lender.
4.14%
3.96%
$0
$0 p.a.
80%
Investors can go from application to full approval in as little as 20 minutes with this innovative online lender.
4.13%
4.14%
$0
$0 p.a.
90%
Access a fee-free offset account and a special interest rate for investors.
4.29%
4.31%
$0
$0 p.a.
80%
A simple, variable rate investor loan from an online lender that keeps fees to a minimum.
3.99%
4.62%
$395
$0 p.a.
80%
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.
4.90%
4.31%
$0
$0 p.a.
80%
Lock in a fixed rate for 5 years and make interest-only payments with this investment loan.
4.24%
4.68%
$0
$0 p.a.
90%
Fix your investment repayments for 1 year. You can get this loan with a 10% deposit. Available in QLD, NSW and ACT only.
4.18%
4.19%
$0
$0 p.a.
80%
Investors can easily access their equity using BPAY, a debit Master Card or cheque book with this interest-only line of credit.
4.31%
3.95%
$0
$0 p.a.
80%
A variable interest-only loan for investors. Fast application, low fees, optional offset account. 100% online lender.
4.64%
5.39%
$0
$395 p.a.
90%
Pay off your investment knowing your exact repayments for the first 4 years. Get this loan with a 10% deposit.
4.29%
4.27%
$0
$198 p.a.
70%
Fund your property portfolio with this fixed rate mortgage which includes a 100% offset account. 30% deposit required.
3.94%
3.92%
$0
$0 p.a.
80%
Lock in your interest rate for 2 years and enjoy flexibility, an optional offset account and a fast online application process.

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Credit services for Aussie Select, Aussie IQ and Aussie Optimizer products are provided by AHL Investments Pty Ltd ACN 105 265 861 Australian Credit Licence 246786 ("Aussie"), and its appointed credit representatives. Credit for Aussie Select products is provided by Residential Mortgage Group Pty Ltd ACN 152 378 133 Australian Credit Licence 414133 (“RMG”). RMG is a wholly-owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945. Credit for Aussie Optimizer products is provided by Perpetual Limited ABN 86 000 431 827 (Lender). Credit for Aussie IQ is provided by Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502. Home loans issued by the Lender are serviced by Macquarie Securitisation Limited ABN 16 003 297 336, Australian Credit Licence 237863 (MSL).

Aussie is a trade mark of AHL Investments Pty Ltd. Aussie is a subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. ©2018 AHL Investments Pty Ltd ABN 27 105 265 861 Australian Credit Licence 246786.

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