Top tips to borrow for investment property in a company

A company structure can separate the investment property from your personal assets and provide clarity when multiple parties are involved. Most lenders will consider applications where a company is the borrower, but deposit requirements are higher and rates are priced as commercial loans rather than standard residential investor products.

Balwyn investors often look to companies when holding multiple properties or when business partners co-invest. The suburb's median house price sits above one million dollars, so investors entering this market typically hold equity elsewhere or combine capital from more than one source. A company allows each director to contribute capital and limits personal exposure if the venture runs into difficulty.

Why borrow in a company name rather than as an individual

Borrowing in a company separates the asset from your personal balance sheet and offers limited liability protection. If the company faces financial difficulty, creditors generally cannot pursue directors' personal assets beyond their initial investment in the company, provided the company has been managed properly.

Consider a buyer who holds an established portfolio of properties in their own name and wants to acquire a new investment property with a business partner. Borrowing personally would require one party to take the loan in their name alone or both to borrow as individuals, exposing each person's entire asset base. A company structure allows both directors to share ownership without cross-collateralising personal property or taking unlimited personal risk. In a scenario where the property performs below expectations or vacancy runs longer than forecast, the loss is absorbed by the company rather than flowing directly onto individual credit files.

Deposit and loan-to-value requirements for company borrowers

Lenders typically classify company borrowing as commercial finance, even when the asset is residential. Most require a minimum 20 per cent deposit, though some will lend at higher loan-to-value ratios if the directors provide personal guarantees and the company can demonstrate stable income or substantial equity elsewhere.

Balwyn attracts buyers looking for established homes on larger blocks close to Whitehorse Road retail and Balwyn High School. A company purchasing an investment property in this area would generally need to provide at least 20 per cent of the purchase price as deposit, funded from company reserves, director contributions, or equity released from other property held by the directors personally. Lenders Mortgage Insurance is not usually available for company borrowers, so exceeding an 80 per cent loan-to-value ratio typically requires additional security or director guarantees.

Interest rates and product features for company investment loans

Company borrowers pay commercial rates, which are typically higher than standard investment loan rates offered to individuals. Rates are structured as variable or fixed, and interest-only periods are available, though the maximum interest-only term is often shorter than for personal borrowers.

Variable rates for company borrowers currently sit above standard investor variable rates, reflecting the higher risk lenders assign to corporate entities with limited trading history or minimal assets. Fixed terms are available for one to five years, though rate discounts are smaller and break costs apply if the loan is repaid early. Most lenders will allow interest-only repayments for up to five years, after which the loan converts to principal and interest. In scenarios where rental income covers interest but not principal repayment, this conversion can create cash flow pressure if the company has not built reserves during the interest-only period.

Tax treatment and negative gearing for company-owned property

Under current rules, interest on borrowings used to acquire rental property is deductible against rental income. Where the property is held by a company, losses can be offset against other company income, but cannot be distributed to directors to offset against their personal income.

From 1 July 2027, net rental losses from residential properties acquired on or after 7:30pm AEST on 12 May 2026 will be quarantined and can only be offset against residential rental income or carried forward. This applies equally to companies and individuals. For a company acquiring an established property in Balwyn after that date, rental losses cannot reduce the company's tax liability unless the company has other residential rental income. Properties that qualify as eligible new builds remain exempt and can be negatively geared under existing rules. This distinction matters for investors considering whether to acquire an established home or pursue a knock-down rebuild or subdivision that increases dwelling numbers.

Personal guarantees and director obligations

Most lenders require personal guarantees from all directors when lending to a company. A guarantee makes each director personally liable for the full amount of the debt if the company defaults, removing much of the limited liability benefit that a company structure otherwise provides.

Guarantees are typically unlimited, meaning the director's personal assets, including their home and other investments, can be pursued by the lender if the company cannot meet repayments. In practice, lenders assess both the company's serviceability and the financial position of each guarantor. For Balwyn-based investors who hold property in their own name and are considering a company purchase, this means the lender will include the new loan in your personal borrowing capacity calculations even though the loan sits on the company balance sheet. If the property is later sold, the guarantee is released once the loan is repaid.

Lender appetite and application complexity

Not all lenders offer residential investment loans to companies, and those that do apply stricter serviceability tests and require more detailed financial documentation. Applications take longer to assess than personal loans, and approval conditions are more prescriptive.

Lenders typically request company financials, director guarantees, company structure documents, and evidence of how the deposit was sourced. In our experience, investors underestimate the time required to gather this documentation and the impact that a newly established company with no trading history has on lender appetite. If the company has been operating for less than two years, most lenders will assess serviceability based on the guarantors' personal income and assets rather than company cash flow. For established companies with a history of rental income from other properties, lenders may assess serviceability on company financials alone. This difference influences which lender is approached and how the application is structured.

When a company structure makes sense and when it does not

A company structure is most useful when multiple parties are contributing capital, when the investor holds a large portfolio and wants to separate new acquisitions, or when the property will eventually be transferred into a different ownership structure. For single investors acquiring one property, the additional cost and complexity rarely justify the structure.

Balwyn's property market attracts upgraders and downsizers as well as investors, and the rental pool includes families seeking access to the school zone and professionals leasing while they search for a property to purchase. For an investor acquiring a single property in this market, borrowing personally through a standard investment loan offers lower rates, simpler applications, and access to a wider range of lenders. A company structure becomes relevant when the investor is purchasing with a business partner, holding the property through a related business entity, or planning to develop the site in future and wants the asset held separately from personal property.

Call one of our team or book an appointment at a time that works for you to discuss whether a company structure suits your circumstances and which lenders will consider your application.

Frequently Asked Questions