Investment Property Loans Parramatta

A lender does not count the full rent. Twenty to twenty-five per cent is typically shaded off before the income touches your assessment, to allow for vacancy, management fees, rates, insurance and repairs. On a Parramatta unit returning a solid yield that discount removes a meaningful slice of the income you were counting on.

The consequence is that two investors with identical properties can get different answers depending on where they apply, because the shading percentage and the treatment of other commitments vary between lenders. It is one of the few places where lender selection changes the borrowing figure rather than just the price.

It also means a spreadsheet built on gross rent will overstate what you can borrow, sometimes badly. We would rather give you the shaded number early, even when it is smaller than the one you arrived with, than have an application fall over on a figure that was never going to hold.

From February 2026, APRA limits how much lending at a debt-to-income ratio of six or above a bank may write, capping it at twenty per cent of new lending. Debt-to-income is total debt against total income, so it counts every loan you hold, not only the one you are applying for.

This is a portfolio constraint, not a single-purchase one. An owner-occupied mortgage plus one investment property is often enough that a third purchase pushes your ratio over six, at which point the lender is rationing a limited allowance rather than assessing you on merit. The file can be strong and still not fit inside the quota.

Planning around it is possible if it is thought about before you buy rather than after. How much equity goes in, whether debt is paid down first, which lender has room and in what order the purchases happen all move the ratio. That planning is worth having on the second property, not the fourth.

Interest only keeps your outgoings lower during the term and preserves cash flow, which is why it is common among investors and why some accountants prefer it. What it does not do is reduce the debt, so at the end of the interest only period the same balance has to be repaid over a shorter remaining term, and the repayment steps up.

Lenders assess that step-up. The application is tested on your ability to service principal and interest over the reduced term, not on the lower payments you would be making, which means an interest only loan is often harder to qualify for than the equivalent principal and interest loan rather than easier.

Neither choice is right in general. It depends on your cash flow, your tax position and how long you intend to hold. We will run both, and where the answer turns on tax rather than on finance we will say so and point you to your accountant.

NSW land tax applies once the combined land value of your taxable holdings passes the general threshold, which is $1,075,000. Your principal residence is generally exempt, so for most investors it is the investment property that brings the liability into existence.

The detail that matters is that the threshold has been frozen rather than indexed. As land values rise, more holdings drift over a line that is no longer moving with them, so a Parramatta holding comfortably under the threshold today can be over it in a few years without a single further purchase.

It is charged on land value rather than on the property’s market value, which is part of why a unit and a house at similar prices can carry very different land tax exposure: an apartment’s share of the land is small. That interacts with the yield gap in ways worth thinking about before choosing between the two, and it is a real reason to take the question to your accountant early.