Top Strategies to Fund Your Investment Property Purchase

Buying an investment property when you're a bricklayer comes down to proving your income and understanding how lenders calculate what you can borrow.

The deposit is usually the first hurdle. Most lenders want at least 20% of the purchase price saved to avoid Lenders Mortgage Insurance, though some investment loan options for tradies can work with 10% if you're willing to wear the LMI cost. That 20% needs to be genuine savings or equity from your existing home, not borrowed funds. If you're using equity from your current property, the lender will reassess your borrowing capacity across both loans, so you need enough servicing capacity to cover your home loan and the new investment loan together.

Borrowing capacity is tighter for investment loans than owner-occupier loans. Lenders assess rental income at around 80% of the expected rent to account for vacancy periods and maintenance costs. If the property rents for $500 per week, the bank will only count $400 per week as income in their calculations. Your existing debts, living expenses, and the new loan repayments all get factored in. For bricklayers, especially those who are self-employed or working as subcontractors, proving your income means providing tax returns, BAS statements, and bank statements that show consistent earnings. If your income fluctuates between busy and slow periods, lenders typically average your last two years of tax returns.

Consider a bricklayer who earns around $90,000 per year and owns a home with $150,000 in usable equity. They want to buy an investment property and use that equity as the deposit. The lender will assess whether they can service both the existing home loan and the new investment loan, factoring in only 80% of the projected rental income. If the numbers don't stack up, the application gets declined, even though the equity is sitting there. Running the numbers with a broker before you start looking at properties saves you from wasting time on listings you can't actually finance.

How Interest Rate Structure Affects Your Repayments

You can structure an investment loan as variable, fixed, or split between the two. Variable rates move with the market, which means your repayments can go up or down. Fixed rates lock in a rate for a set period, usually between one and five years, giving you certainty but less flexibility if you want to make extra repayments or sell early. Most investors go variable or split because investment loans are often held for longer than owner-occupier loans, and flexibility matters more over a longer timeframe.

Interest only repayments are common for investment loans because they lower your monthly outgoings and may improve your tax position, since loan interest on an investment property is tax-deductible. You're not paying down the principal, so the loan balance stays the same, but your cash flow is higher. After the interest-only period ends, usually five years, the loan converts to principal and interest unless you apply to extend it. Some investors prefer principal and interest from the start to build equity faster, but that's a choice that depends on your broader financial strategy and whether you're prioritising cash flow or equity growth.

Rate discounts on investment loans are generally smaller than those on home loans. Lenders see investment property as higher risk, so even if you've got a solid deposit and clean financials, expect to pay a margin above what you'd get on an owner-occupier loan. Shopping around is worth it, because the difference between lenders can be 0.3% to 0.5%, which adds up over the life of the loan.

Tax Changes That Hit Established Investment Properties from 2027

If you bought an established investment property after 12 May 2026, the negative gearing and capital gains tax rules change from 1 July 2027. Under the old rules, if your property costs more to hold than it earns in rent, you can claim that loss against your wage income. From 1 July 2027, losses on properties bought after Budget night can only be offset against rental income or capital gains from other residential property, not against your bricklaying income. You can carry the loss forward to use in future years, but you lose the immediate tax benefit.

The capital gains tax discount also changes. Instead of the 50% discount that's been in place for decades, gains on properties purchased after 12 May 2026 will be taxed using inflation indexing with a minimum 30% tax rate on the gain. New builds are exempt and get to choose between the old 50% discount or the new arrangements, whichever works out lower. If you already own an investment property, the changes don't apply to any gains that accrued before 1 July 2027.

For a bricklayer buying now, the practical impact is that established properties are less attractive from a tax perspective, and new builds or properties purchased before Budget night retain more favourable treatment. If you're still looking at established properties, the numbers need to stack up on rent and capital growth alone, because the tax break is weaker.

Deposit Size and Lenders Mortgage Insurance Costs

If you're borrowing more than 80% of the property value, you'll pay Lenders Mortgage Insurance. LMI protects the lender, not you, and the cost depends on your loan-to-value ratio and loan amount. On a property where you're borrowing 90%, LMI could be several thousand dollars, added to your loan or paid upfront. Some lenders offer LMI waivers for tradies in specific circumstances, usually tied to your occupation or income level, but these are less common for investment loans than for owner-occupier lending.

Using equity from your home instead of cash can help you avoid LMI, provided you keep your overall borrowing under 80% across both properties. The lender will value both properties and calculate your total debt against the combined value. If you're sitting at 75% LVR across the portfolio, you're in the clear. If you're at 85%, you're paying LMI on the portion above 80%.

A bricklayer with a home valued at $600,000 and a loan of $300,000 has $480,000 in equity at 80% LVR, which leaves $180,000 usable. That's enough to fund a deposit on a property without needing to save additional cash, but only if the rental income and your wage can service the combined debt. The equity might be there, but the servicing capacity is the constraint most borrowers hit first.

What Lenders Look at Beyond Your Income

Lenders assess your entire financial position, not just what you earn. Existing debts like car loans, credit cards, and buy-now-pay-later accounts all reduce your borrowing capacity. Even if you pay your credit card off every month, the lender calculates repayments based on the limit, not your actual balance. A $10,000 credit card limit costs you around $300 per month in serviceability, which can reduce your borrowing capacity by $60,000 or more depending on the lender's calculator.

Your living expenses also get scrutinised. Lenders use either your declared expenses or a benchmark figure called the Household Expenditure Measure, whichever is higher. If you're claiming you live on $1,500 a month but the HEM says someone in your situation should be spending $2,500, the lender uses $2,500. That directly reduces how much you can borrow.

For self-employed bricklayers, the assessment is stricter again. You'll need two years of tax returns showing consistent or growing income, and some lenders will reduce your income by another margin to account for the variability of trade work. If your last two years showed $85,000 and $95,000, some lenders will average that to $90,000, while others might apply a further haircut. Knowing which lenders treat trade income more favourably is where a broker adds value, because not all lenders assess the same way.

Structuring the Loan for Flexibility and Growth

Most investors want the ability to access equity again in future without refinancing. An offset account or redraw facility can help, but interest-only loans generally don't build equity through repayments, so your equity growth depends entirely on the property increasing in value. If you plan to buy more investment properties down the track, keeping your loans separate rather than cross-collateralised gives you more control. Cross-collateralisation means the lender holds security over multiple properties under one loan facility, which can make it harder to sell one property or refinance part of your portfolio without the lender's approval across the whole lot.

Setting up the loan structure properly at the start avoids costly fixes later. If you're planning to expand your property portfolio within a few years, talk to your broker about how the current loan will affect your serviceability for the next one. Borrowing at 90% LVR now might get you into the market, but it leaves you with no equity buffer and limited capacity to borrow again until the property appreciates or you pay down some debt.

If you're ready to look at what you can borrow or want to talk through how the recent tax changes affect your situation, call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions