How to plan for an investment property when you have mortgage repayments
Thinking about buying an investment property but still repaying your home loan? Learn how to plan confidently, manage costs, and set yourself up for success with expert tips from Unloan.
Are you on the hunt for a second property? Whether you’re looking for an investment property or you're keen to upsize and turn your current home into a rental, it’s important to do your research to make sure you can keep up with mortgage repayments and expenses for two properties.
Read our guide to learn more about buying a second home and staying on top of your mortgage repayments.
Budgeting for an investment property
Before you start looking for a second property, it’s important to start by running a few numbers. Essentially, to make sure you can afford to buy an investment property and service two home loans, along with the other ongoing costs that come with owning a home.
Take a look at your current financial situation, including your income, expenses and debts as well as your credit score. You can run these figures through a borrowing power calculator to get an idea of how much you might be able to borrow. Or, you can take it one step further and approach your lender for conditional approval to get a more concrete idea of what they’re willing to lend you.
Be sure to also consider the upfront costs that come with buying a property and factor them into your budget too. Once you know what you can afford, you’ll have a better idea of what price range you should be looking at for a second property.
Funding an investment property
One of the main bonuses of already owning an existing property is the potential to use the equity in your current home to fund the purchase of an investment property.
Rather than trying to save up enough cash for a deposit while also balancing your existing home loan, you can continue making your regular repayments and grow your equity. Eventually, you could have enough to be able to stump up a 20% deposit for an investment property.
When you buy an investment property, you might need to take out a second home loan. With this in mind, it’s important to make sure you factor in the cost of establishing another mortgage along with your deposit.
Turning your home into an investment property
If you’re planning on buying a second house and renting the first, there are a few key points to consider.
Assessing rental appeal
Firstly, does your home have rental appeal? Determining whether or not your current home would make a suitable investment property can make all the difference to how easy it is to rent out. Not to mention, depending on how appealing your home is, you might even be able to command more rent for it.
Here are a few questions to ask yourself to figure out whether or not your home would make a good rental:
- Is your home located in an area that appeals to renters?
- Will it be easy to find and keep good tenants?
- Is your home close to amenities, like public transport, shops, parks, schools and other facilities?
- Does your home have any issues that could put renters off? Can you fix them?
- Does your home need any repairs, improvements or renovations to bring it up to scratch before you can rent it?
Calculate your cash flow
Before buying a second home and renting the first, it’s worth considering the additional costs you’ll need to account for. While your rental income should go some of the way to covering these expenses, depending on how your investment property is geared, there may be a shortfall that you’ll need to cover.
Consider costs like:
- Mortgage repayments: Include principal and interest payments if you have a mortgage on the property.
- Property management fees: Hiring a property manager typically costs around 7-10% of the rental income.
- Repairs and maintenance: Allocate funds for ongoing repairs and maintenance. A good rule of thumb is to set aside 1-2% of the property value annually.
- Council rates: Local government rates for services such as waste collection, water supply, and sewerage.
- Insurance: Landlord insurance to cover property damage, loss of rent, and liability.
- Strata fees: Applicable if your property is part of a strata scheme (e.g., apartment or townhouse complexes).
- Utilities: If you cover any utilities for the tenants, include these costs.
- Advertising and letting fees: Costs associated with finding and placing tenants.
- Legal and accounting fees: For professional advice and tax return preparation.
- Interest rates: Keep an eye on interest rates, especially if you have a variable rate mortgage, as this can impact your mortgage repayments.
- Vacancy rate: Account for periods when the property may be vacant. A conservative estimate might be around 5-10% of the year.
- Rent shortfall: If the rental income isn’t enough to cover the mortgage repayments and other rental expenses, you’ll need to be able to cover the difference.
Consider tax implications
Another important factor to take into account is the potential tax implications that come with turning your primary residence into an investment property. You may be able to claim a tax deduction for certain expenses such as property management fees, depreciation on plant and equipment, council rates and the interest component of any investment loan.
Note that the 2026-2027 Federal Budget has announced reforms to negative gearing arrangements for investors. Under the new rules, if the property is:
- Newly built residential property - any net rental loss you incur during the financial year may potentially be offset against other income you earn, such as your salary.
- An established residential property purchased after 12 May 2026 - any net rental loss you incur during the financial year is unlikely to be available to offset against other income. The loss instead carries forward to future years and, if unrecouped, reduces the amount of the capital gain when you sell the property.
- An established residential property purchased before 12 May 2026 – these properties should generally continue to qualify for potential offset of net rental loss against other income (such as salary and wages).
You should consider speaking to your tax adviser or accountant for more information about what expenses are tax deductible in your circumstances and how the announcements in the Federal Budget could impact you.
Whether you’re looking to buy a second home or refinance your current home loan, Unloan is here to help. Our new kind of home loan product is designed to save you more. Plus, with a range of great features, you can take advantage of competitive interest rates, an annual loyalty discount and different loan configurations to suit your needs.
Unloan is a division of Commonwealth Bank of Australia.
Applications are subject to credit approval, satisfactory security and you must have a minimum 10% deposit or 10% equity in the property (LVR below 90%). Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. You cannot borrow more than $2,000,000 of above 80% LVR loans. In some cases depending on the property’s location or type, we may only be able to lend you up to 70%.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan. The loyalty discount is applied to your variable rate at the relevant time, and this rate may increase or decrease over your loan term. For more information view our rates and features.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
Unloan is a division of Commonwealth Bank of Australia, and Commonwealth Bank does not provide tax (financial) advice under the Tax Agent Services Act 2009 (Cth). You should consider seeking independent tax advice from a registered tax agent, accountant or adviser before you make any decisions based on this information.
Applications are subject to credit approval, satisfactory security and you must have a minimum 10% deposit or 10% equity in the property (LVR below 90%). Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. You cannot borrow more than $2,000,000 of above 80% LVR loans. In some cases depending on the property’s location or type, we may only be able to lend you up to 70%.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan. The loyalty discount is applied to your variable rate at the relevant time, and this rate may increase or decrease over your loan term. For more information view our rates and features.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
Applications are subject to credit approval, satisfactory security and minimum deposit requirements. Full terms and conditions are found on our Unloan Terms and Conditions. Modified Terms and Conditions will be set out in our Notice of Variation Agreement, if you are approved. This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan. The loyalty discount is applied to your variable rate at the relevant time, and this rate may increase or decrease over your loan term. For more information view our rates and features.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
