How Much Can I Borrow For an Investment Property in Australia?

The amount you can borrow for an investment property in Australia depends on several factors, including:

• Your income and expenses
• Your deposit
• The property type and location
• Your credit score

Lenders mortgage insurance (LMI) is a one-time fee paid to protect the lender if you default on your loan. The cost of LMI varies depending on the loan amount and your LVR.

Absolutely! While it might involve a few extra steps compared to Australian residents, owning an investment property in Australia whilst living in Hong Kong is achievable.

Borrowing for an investment property in Australia as a resident of Hong Kong can be trickier than for Australian residents, but it’s still possible! Here’s a breakdown of what you can expect:

• Maximum LVR typically 75-80% vs 90-95% for Australian residents
• Hong Kong income assessed but may use lower Australian tax rates
• Higher deposits allow higher borrowing amounts
• Property type and location affect borrowing limits
• Strong Hong Kong credit history is important

The minimum down payment (deposit) for an investment property in Australia is typically 20% of the property’s value. So if you’re buying a $500,000 investment property, you’ll need a deposit of at least $100,000.

Some lenders may allow deposits as low as 10-15%, but this will mean higher interest rates and lenders mortgage insurance costs. A deposit of 20% or more is considered ideal.

On a $150,000 per year salary in Australia, you could potentially borrow around $800,000 – $1 million for an investment property loan. However, this depends on your:

• Other income sources
• Current debt levels
• Living expenses
• Creditworthiness
• Size of your deposit

Even with a high income, lenders assess all your financial commitments carefully. The larger your deposit, the more you may be able to borrow.

There are pros and cons to having an investment property in Australia:

Pros:

• Potential for capital growth over time
• Rental income stream
• Tax benefits like depreciation/deductions
• Build long-term wealth/equity

Cons:

• Large upfront costs (deposit, stamp duty etc.)
• Holding costs if untenanted
• Property market volatility
• Requires active management

Whether it’s “worth it” depends on your circumstances and goals. It offers a path to wealth creation but also risks and ongoing responsibilities.

The average return for residential investment properties in Australia is around 5-8% per year. This factors in:

• Rental yields of 3-4% in capital cities
• Average capital growth of 3-4% per year

However, returns can vary dramatically based on the property location, housing demand, rental rates achieved, holding costs, and timeframe. Some investors aim for positive cash flow first, others prioritise long-term capital gains.

Strategic purchasing, adding value through renovations, and good property management can help maximise investment returns.

Generally, no. Most Australian lenders do not consider living away from home allowance (LAFHA) as assessable income for borrowing purposes because it’s a tax-exempt allowance rather than regular taxable income.

However, some niche or non-bank lenders may consider it on a case-by-case basis—especially if it’s part of a stable long-term employment package.

The amount you can borrow against your home’s equity depends on several factors, including your property’s current market value, the outstanding balance on your mortgage, and the lender’s policies. Typically, lenders allow you to borrow up to 80% of your property’s value, minus any existing mortgage debt. This is often referred to as your “usable equity.”

After a bankruptcy discharge, your borrowing capacity will depend on how long it’s been since your discharge, how well you’ve rebuilt your credit, and your current income and debts.

Most lenders require a minimum of 2 years post-discharge before they’ll consider your mortgage application and start the mortgage lending process. Some may require more time, while others—like non-bank lenders—may be open to shorter waiting periods if you’ve shown financial stability.

In terms of how much you can borrow, your borrowing power is typically lower than someone with a clean credit history. However, once you’ve rebuilt your credit and shown consistent income, you may be able to borrow up to 80% of a property’s value (LVR) with certain lenders.

• Working with a specialist mortgage broker can help you:
• Access lenders who work with post-bankruptcy applicants
• Understand your maximum borrowing limit
• Prepare your application for the best possible outcome