What are the Property Types for Investment Loans?

Not all investment properties receive the same lending treatment. A two-bedroom unit in Brisbane might attract a lower loan-to-value ratio than a house in the same postcode, while a new apartment off-the-plan could unlock lower deposit requirements and different tax treatment under proposed negative gearing changes.

Lenders assess property type before they assess you. That assessment determines your deposit size, whether you pay Lenders Mortgage Insurance, the interest rate you receive, and in some cases whether you can borrow at all. Understanding how lenders view different property types lets you structure your purchase to match both your financial position and your long-term investment strategy.

Established Houses and Their Lending Advantages

Established houses typically receive the most flexible lending terms. Most lenders will accept a loan-to-value ratio of up to 90 per cent for houses in established suburbs, and some will go to 95 per cent if you meet serviceability and deposit requirements. Houses also tend to attract lower interest rates than units or apartments, with some lenders offering rate discounts of up to 0.20 per cent compared to higher-density property types.

Consider a buyer looking at a three-bedroom house in Logan. With a deposit of 15 per cent, they avoid Lenders Mortgage Insurance if the property is valued conservatively by the lender's panel. The same buyer purchasing a unit in the same suburb at 85 per cent LVR might still face LMI depending on the building's age, location within the complex, and whether the block is dominated by investors. Houses also perform more reliably at resale, which matters to lenders assessing security risk.

From a tax perspective, established houses acquired after 12 May 2026 will be subject to the proposed negative gearing changes from 1 July 2027. Losses will be quarantined and only deductible against residential rental income or capital gains. That changes the appeal of holding an established house in the early years if you expect consistent negative cash flow.

Units and Townhouses in Multi-Dwelling Complexes

Units and townhouses come with tighter lending conditions. Most lenders cap loan-to-value ratios at 80 to 90 per cent depending on the size of the complex, the proportion of owner-occupiers versus investors, and whether the building is classified as high-density. If a block contains more than 50 per cent investor-owned properties, some lenders reduce the maximum LVR or increase the interest rate. If the building exceeds six storeys, additional lenders exit altogether.

Body corporate records matter. Lenders review sinking fund balances, upcoming special levies, and whether any major defects or cladding issues are recorded. A unit with a low body corporate fee might initially look appealing, but if the sinking fund is underfunded and a roof replacement is due, that can delay or derail settlement. In our experience, buyers who request body corporate records early avoid surprises at the eleventh hour.

Vacancy rates in unit-heavy precincts also affect borrowing capacity. Lenders apply a rental income buffer, and if vacancy rates in the suburb sit above 4 per cent, some will discount projected rental income by an additional margin. That reduces your borrowing capacity even if the property is currently tenanted. Queensland's unit markets in inner-city Brisbane and parts of the Gold Coast have seen vacancy rates fluctuate, so location within the suburb matters as much as the property itself.

New Builds and Off-the-Plan Apartments

New builds receive different treatment under both lending and tax rules. From 1 July 2027, new builds will retain full negative gearing benefits, meaning losses remain deductible against all income types. Investors purchasing new builds can also choose between the existing 50 per cent capital gains tax discount or the proposed cost base indexation method when calculating gains. That choice could deliver significant tax savings depending on inflation over the holding period.

Lenders treat new builds and off-the-plan purchases with caution. If you purchase off-the-plan and the property settles 12 to 18 months later, the lender will revalue the property at settlement. If the market has softened or if the building has oversupplied the local market, the revaluation might come in below contract price. You would then need to cover the shortfall with additional cash or accept a higher LVR and pay Lenders Mortgage Insurance.

Some lenders offer first-year rental guarantees or rebates for new builds, but these are marketing tools, not loan features. The rental guarantee expires, and if the suburb cannot sustain the projected rent, you carry the vacancy risk from year two onward. Buyers should calculate investment loan repayments using actual market rent, not the developer's projection. That approach protects your cash flow once the guarantee period ends.

Rural and Regional Properties

Rural properties and lifestyle blocks bring the strictest lending conditions. Most lenders classify any property on more than two hectares as rural, and some apply that classification at one hectare depending on zoning. Once classified as rural, maximum LVR typically drops to 70 or 80 per cent, and interest rates can increase by 0.30 to 0.50 per cent above standard investor rates.

Lenders also assess income-generating capacity differently. If the property relies on agistment, farm income, or tourism, you will need to demonstrate consistent income over multiple years. Rental income from a rural homestead alone is rarely sufficient to support borrowing unless the property sits within commuting distance of a regional centre. For investors targeting passive income, rural properties demand higher deposits and deliver lower rental yields than metropolitan alternatives.

Some lenders will not lend on rural properties at all, which narrows your access to competitive rates and flexible loan features. If you refinance later or want to leverage equity for portfolio growth, that limitation follows you. Investors building wealth through property generally avoid rural assets unless they have specific knowledge of the local market or a non-financial reason for holding the property.

Serviced Apartments and Short-Term Rental Properties

Serviced apartments and properties marketed for short-term rental are treated as commercial or semi-commercial by most lenders. If the property comes with a management agreement requiring you to place it in a rental pool, the loan will likely fall under commercial lending criteria. That means higher deposits, shorter loan terms, and interest rates that sit above standard investment loan products.

Commercial investment loans typically require a minimum 30 per cent deposit, and the loan term might be capped at 15 or 20 years rather than 30. Interest-only periods are shorter, and you will not access the same rate discounts available on residential investor loans. If the property is your first investment, most lenders will not approve the loan at all unless you hold significant equity elsewhere.

Short-term rental income is also heavily discounted for serviceability. Lenders apply a buffer of 20 to 30 per cent to account for vacancy, platform fees, cleaning costs and seasonal fluctuations. Even if the property generates higher gross income than a traditional rental, your borrowing capacity might be lower. Investors pursuing this strategy should speak with a broker experienced in commercial loans before committing to a contract.

Properties with Dual Occupancy or Granny Flats

Properties with dual occupancy or a compliant granny flat can increase rental income, but lenders assess them individually. If the granny flat is council-approved, separately metered, and genuinely habitable, most lenders will accept 80 per cent of the projected rent when calculating serviceability. If the structure is unapproved or non-compliant, they will ignore the income altogether and may reduce the property's valuation.

Some lenders treat dual occupancy properties as higher risk, particularly if the site has been subdivided or if the two dwellings share essential services. That can result in a lower maximum LVR or a requirement for a larger deposit. If you are purchasing a property with an existing granny flat, confirm its approval status and whether it meets current council standards before exchanging contracts.

For investors considering adding a granny flat after purchase, construction costs need to be factored into total borrowing. A construction loan or equity release might be required, and that triggers a new valuation and serviceability assessment. The rental income uplift needs to justify the additional debt and the holding costs during construction.

How Property Type Shapes Your Investment Strategy

Property type dictates your deposit, interest rate, borrowing capacity, and tax position. A house in an established suburb offers flexibility and stronger resale confidence. A new build offers tax advantages under proposed negative gearing changes but carries revaluation risk at settlement. A unit offers lower entry cost but tighter lending terms and higher body corporate exposure.

Investors looking to build wealth through property need to match property type to their financial position and timeline. If you are borrowing at a high LVR, a house will give you more lender options and lower rates. If you have a strong deposit and want to maximise tax deductions under the new rules, a new build becomes more appealing. If you are planning to leverage equity for portfolio growth, avoid property types that limit future refinancing options or reduce borrowing capacity.

The proposed changes to negative gearing and capital gains tax add a layer of complexity. Properties acquired before 12 May 2026 retain existing tax treatment, but anything purchased after that date falls under the new rules unless it qualifies as a new build. That timing matters, and it should influence not just whether you buy, but what you buy.

If you are weighing up different property types or want to understand how lending terms apply to a specific opportunity, call one of our team or book an appointment at a time that works for you.

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