An investment unit often makes more sense than a house when you're working shifts.
The numbers are straightforward. Units in Perth suburbs like Morley, Maylands, or Scarborough typically sit between $350,000 and $550,000, which means your investor deposit sits around $70,000 to $110,000 at an 80% loan to value ratio. For WA police officers who might already own a home, this kind of entry point works when you're looking at leveraging equity rather than saving another deposit from scratch.
The real difference shows up in how lenders assess units compared to houses. Body corporate fees get added to your loan servicing calculation, which affects how much you can borrow. Rental income gets shaded at around 80%, meaning lenders only count $400 of a $500 weekly rent when calculating your borrowing capacity. And if you're buying in a complex with more than 50% investor ownership, some lenders will either decline the application or increase your deposit requirement.
How Body Corporate Affects Your Loan Amount
Lenders subtract quarterly body corporate fees from your borrowing capacity before they approve your investment loan application.
Consider a scenario where you're looking at a two-bedroom unit in Mount Lawley with $1,200 quarterly strata fees. That's $400 per month added to your existing commitments. If you're earning $95,000 as a Senior Constable and already have a $450,000 home loan, those body corporate fees can reduce your available borrowing by around $50,000 to $60,000 depending on the lender. This matters when you're deciding between a unit at $480,000 with high fees versus one at $510,000 with owner-occupier management and lower levies. We regularly see officers assume the cheaper purchase price always wins, but the ongoing costs shift that calculation. When you're working with investment loan options from banks and lenders that understand policing income including allowances, those quarterly fees become part of the total assessment rather than an afterthought.
Interest Only or Principal and Interest
Interest only loans let you claim maximum tax deductions while keeping your repayments lower during the holding period.
Most property investors choose interest only for the first five years, then switch to principal and interest or refinance. At current variable rates, a $400,000 loan on interest only sits around $1,900 per month compared to $2,400 on principal and interest. That $500 difference matters when you're managing vacancy periods or covering shortfalls between rent and repayments. The benefit comes through maximising tax deductions while you build wealth through capital growth rather than forced equity. Once you've held the property for several years and your main residence loan has reduced, you can redirect surplus income toward paying down the investment loan if that suits your property investment strategy.
Roster-friendly lenders also let you split your loan, putting 70% on a fixed interest rate and 30% variable. This gives you certainty on most of your repayments while keeping flexibility for extra payments without penalty.
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LVR Limits and Lenders Mortgage Insurance
Most lenders cap investment loans at 90% LVR, and anything above 80% triggers Lenders Mortgage Insurance.
LMI on an investment property loan typically costs more than owner-occupied LMI. On a $450,000 unit purchase with a 10% deposit, you're looking at LMI around $15,000 to $18,000 depending on the lender. WA police officers who qualify for LMI waivers on their main residence don't automatically get the same waiver on investment lending, though some lenders offer discounted LMI for emergency services. If you're using equity release from your current home to fund the deposit, you can avoid LMI entirely by keeping the total borrowing at or below 80% across both properties. That usually means you need at least $90,000 in accessible equity plus enough buffer to cover stamp duty and purchase costs.
What Rental Income Calculations Mean for Borrowing
Lenders shade rental income to account for vacancy periods and management costs, usually applying 80% of the assessed rent to your servicing calculation.
If your investment unit generates $520 per week, the lender counts $416 toward your income. In Perth's current rental market, vacancy rates sit around 1% to 2% in established suburbs, but lenders still apply the shading regardless of local conditions. This affects officers looking to buy their first investment property while still renting themselves, a strategy called rentvesting. You need enough serviceability to cover both your own rent and the investment loan repayments, even with the rental income factored in. For a Constable earning $85,000 with minimal other debts, this usually caps borrowing around $380,000 to $420,000 depending on the lender and whether they include your shift allowances in the assessment. Understanding how borrowing capacity works for investment lending means you can target units within your actual approval range rather than waste time on properties that won't get through servicing.
Negative Gearing and Claimable Expenses
Negative gearing happens when your rental income doesn't cover your loan repayments and property costs, creating a tax-deductible loss.
On a $450,000 investment loan at interest only, you're paying around $22,800 per year in interest. Add body corporate at $4,800, council rates at $1,600, property management at $2,700, and landlord insurance at $600. Total outgoings sit around $32,500. If the unit rents for $500 per week, that's $26,000 in rental income, leaving a $6,500 shortfall. That shortfall reduces your taxable income, which at a marginal tax rate of 32.5% returns around $2,100 to you at tax time. You're still $4,400 out of pocket each year, but you're holding an asset that should grow in value while receiving a tax benefit that offsets part of the cost. When you're deciding whether to buy an investment property or pay down your home loan faster, this calculation sits at the centre of that choice.
Claimable expenses also include depreciation on fixtures and fittings, which a quantity surveyor report identifies. Newer units built in the past ten years typically return $3,000 to $5,000 in annual depreciation deductions without any actual cash expense.
Refinancing When Your Circumstances Change
Refinancing your investment loan makes sense when rates drop, when you're ready to access equity for a second property, or when your current lender won't adjust your loan structure.
WA police officers moving from Constable to Senior Constable or taking on detective roles often see their income jump by $15,000 to $25,000, which opens up additional borrowing capacity for portfolio growth. If your unit in Maylands has increased in value from $480,000 to $550,000 over five years and your loan has reduced to $360,000, you're sitting on $190,000 in equity. At 80% LVR across your total portfolio, that equity can fund the deposit on a second investment property without needing to save another lump sum. Investment loan refinancing also lets you switch from a five-year interest only period that's expiring back to another interest only term if that still suits your tax position, rather than being forced onto principal and interest repayments that increase your monthly outgoings by 25%.
Call one of our team or book an appointment at a time that works for you. We structure investment property finance around shift rosters, not bank opening hours, and we know which lenders assess policing income properly when you're building a property portfolio.
Frequently Asked Questions
How do body corporate fees affect my investment loan borrowing capacity?
Lenders subtract quarterly body corporate fees from your borrowing capacity before approving your loan. For example, $1,200 quarterly fees can reduce your available borrowing by $50,000 to $60,000 depending on your income and existing commitments.
Should I choose interest only or principal and interest for an investment unit loan?
Most property investors choose interest only for the first five years to maximise tax deductions and keep repayments lower. This typically saves around $500 per month on a $400,000 loan compared to principal and interest, giving you more cash flow to manage vacancy periods or shortfalls.
How much deposit do I need for an investment unit in Perth?
Most lenders require at least 10% deposit plus costs, but anything above 80% LVR triggers Lenders Mortgage Insurance. For a $450,000 unit, a 20% deposit of $90,000 avoids LMI and gives you access to better investor interest rates.
How do lenders assess rental income for investment loans?
Lenders typically shade rental income to 80% when calculating your borrowing capacity. If your unit generates $520 per week in rent, they'll only count $416 toward your income, accounting for vacancy periods and management costs.
What expenses can I claim on an investment unit?
You can claim loan interest, body corporate fees, council rates, property management, landlord insurance, and depreciation. These expenses create a tax-deductible loss if your costs exceed rental income, which is called negative gearing.
