Borrowing in a company name for property investment offers a clean separation between personal and investment assets, yet not every lender will touch a company structure and those that do apply different serviceability, deposit and documentation rules.
Why investors in South Morang use company structures for property purchases
A company structure limits personal liability to the assets held within the entity. If you already operate a business through a company or hold multiple investment properties, keeping new acquisitions within a corporate entity can protect your personal residence and other assets from claims tied to the investment. The structure also makes it easier to bring in additional shareholders or transition ownership without triggering a property transfer. For investors in South Morang who are building a portfolio across Melbourne's northern growth corridor, a company structure can centralise holdings and support staged acquisitions without repeatedly refinancing personal loans.
The corporate structure does not, however, remove the director's obligation to act responsibly. If the company borrows beyond its capacity or fails to meet its obligations, directors may still face personal consequences under the Corporations Act.
How lenders assess company borrowing capacity
Lenders calculate a company's borrowing capacity using the rental income of the property being purchased, plus any other income the company earns. Personal income of directors is generally not included unless a personal guarantee is in place. For a company with no prior rental income, this means the serviceability assessment relies entirely on the projected rent of the new property.
Under prudential standards, all residential loans must be assessed at a rate at least 3.0 percentage points above the loan product rate. For a company loan with limited income history, this buffer can result in a lower approved amount than the same investor would achieve borrowing personally. Consider a scenario where a company is purchasing a three-bedroom townhouse in South Morang with an expected rental return of around $480 per week. That income must cover the loan repayment assessed at the higher buffer rate, plus ongoing costs such as property management, rates, insurance and any body corporate fees. If the rental income is insufficient, the application will be declined unless the company has other verifiable revenue or the director provides a personal guarantee that allows their income to be included.
Some lenders will only offer company loans on a principal and interest basis, even where the investor would prefer interest only. Others cap the loan term or require a higher deposit than they would for a personal application.
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Which lenders accept company borrowers and what they require
Not all lenders offer residential investment loans to companies. Among those that do, eligibility criteria vary. Most require the company to be registered for GST if it operates as a business, though a special purpose investment company may be treated differently. All lenders require an Australian Company Number (ACN) and a current ASIC extract. Some request financial statements for the company, especially if it has been operating for more than one financial year. Others accept a letter from the company's accountant confirming the entity's structure and purpose.
Deposit requirements are typically higher for company loans. While a personal investor might access investment loan options at 90 per cent LVR with the payment of Lenders Mortgage Insurance, many lenders cap company loans at 80 per cent LVR. Some reduce that further to 70 per cent for new companies or those with limited operating history. If the company is purchasing a property in a regional area or in a building with specific characteristics, such as a high proportion of investor occupancy, the lender may apply additional LVR overlays.
A company loan may also attract a higher rate than a loan in personal names. The margin can be anywhere from 0.10 to 0.50 percentage points depending on the lender, the loan structure and whether a personal guarantee is provided. Where a guarantee is in place, the lender may apply the same rate and LVR as a personal loan, though this is not universal.
Personal guarantees and what they mean for liability protection
Most lenders require at least one director to provide a personal guarantee when lending to a company. The guarantee makes the individual director liable for the debt if the company defaults. In practical terms, the lender can pursue the director's personal assets to recover the outstanding loan amount.
If the primary reason for using a company structure is to limit personal liability, a personal guarantee reduces that benefit. However, the guarantee typically only attaches to the specific loan, not to other liabilities the company might incur. For investors with multiple properties held across different entities, the guarantee still provides some separation compared to holding all properties in personal names.
Some lenders offer company loans without a personal guarantee, but the trade-off is a lower LVR, higher rate, or both. The lender may also require the company to have substantial equity or a strong operating history before waiving the guarantee requirement.
Tax treatment and deductibility for company-held investment property
Under income tax law, a company pays a flat tax rate of 25 per cent for base rate entities or 30 per cent for other companies, rather than the marginal rates that apply to individuals. Interest on the loan, council rates, insurance, repairs, depreciation and other holding costs are deductible against the company's assessable income, which includes rental income from the property.
From the 2027-28 income year, losses from established residential investment properties acquired after 12 May 2026 can only be deducted against other residential property income, not against other business income the company earns. Losses can be carried forward to offset residential property income in future years. New build properties purchased after that date remain exempt from the restriction, allowing losses to be deducted against all company income. For properties held by the company before 12 May 2026, or properties under contract at that time awaiting settlement, the existing negative gearing rules continue to apply.
Capital gains made by the company do not attract the 50 per cent discount available to individuals. The full gain is included in the company's assessable income and taxed at the corporate rate. From 1 July 2027, cost base indexation and a 30 per cent minimum tax rate apply to gains on residential property for individuals and trusts, but companies are not eligible for the discount and instead continue to be taxed on the full nominal gain at their marginal rate. For investors holding property long-term, this can result in a higher tax liability on sale compared to personal ownership, though franking credits distributed to shareholders may offset some of that burden.
Refinancing and portfolio growth through a corporate structure
Once a company loan is in place and the property has been held for some time, the increased equity can be used to support further acquisitions. A lender will typically allow a company to access up to 80 per cent of the value of an existing property, either by refinancing the loan or establishing a separate line of credit. The released equity can then be used as a deposit for the next purchase.
For investors in South Morang looking to acquire additional properties in nearby growth areas such as Mernda or Doreen, a corporate structure with clear borrowing capacity allows staged purchases without cross-collateralising personal assets. The company can hold multiple properties under one entity, or the investor can establish separate companies for different properties to further compartmentalise risk. Each approach has legal, tax and lending implications, and the choice depends on the investor's broader strategy and risk appetite.
If the company holds multiple properties and seeks to refinance, not all lenders will take on an existing company loan from another institution. Some prefer to lend only for new purchases. Others will refinance but apply stricter servicing criteria or require updated financials and rental statements for all properties in the portfolio. Working with a broker who understands investment loan features and lender appetite for company structures can reduce the time spent on declined applications.
If you are weighing up whether a company structure suits your next purchase or your broader investment strategy, call one of our team or book an appointment at a time that works for you.
Frequently Asked Questions
Can I borrow in a company name for an investment property in South Morang?
Yes, but not all lenders offer loans to companies and those that do typically require a higher deposit, often 20 to 30 per cent, and may ask for a personal guarantee from at least one director. Serviceability is assessed using the company's income, including projected rental income from the property.
Does borrowing through a company reduce my personal liability?
A company structure limits liability to the assets held within the entity, but most lenders require a personal guarantee from directors, which makes the individual liable if the company defaults. The guarantee typically attaches only to the specific loan, not to other company liabilities.
Are company investment loans taxed differently to personal loans?
Yes. Companies pay tax at a flat rate of 25 or 30 per cent and do not receive the 50 per cent capital gains discount available to individuals. From the 2027-28 income year, losses on established properties acquired after 12 May 2026 can only be offset against other residential property income, though new builds remain exempt.
What deposit do I need for a company investment loan?
Most lenders require a deposit of at least 20 per cent for company loans, with some requiring 30 per cent for new companies or properties in certain locations. LMI is generally not available above 80 per cent LVR for company borrowers.
Can I use equity in a company-owned property to buy another investment?
Yes. Once the property has been held for some time, the company can refinance or establish a line of credit to access equity, typically up to 80 per cent of the property's value, and use those funds as a deposit for the next purchase.
