Borrowing through a company structure can offer asset protection and tax planning benefits, but lenders assess these applications differently to personal loans.
Many property investors in Shailer Park and surrounding Logan areas consider company structures as their portfolios expand. The decision to borrow in a company name rather than personally depends on your broader investment strategy, asset protection goals, and how lenders will assess your application. Company lending typically involves higher deposit requirements and interest rates compared to personal borrowing, but the trade-off may be worthwhile depending on your circumstances.
How Lenders Assess Company Loan Applications
Lenders evaluate company borrowing capacity primarily on rental income from the property being purchased, not the business income or director earnings. Most require the property to service itself from day one, meaning rental income must cover loan repayments plus a buffer, typically 1-2% above the actual interest rate. Directors usually provide personal guarantees, which means you remain personally liable if the company defaults, despite the corporate structure.
Consider an investor purchasing a unit near Kimberley Park as a second investment property. The rental yield might be around 5% based on local vacancy rates, but if the lender applies a 7% assessment rate to calculate repayments, the rental income may fall short of what the lender requires. In that scenario, the application could be declined unless the investor increases the deposit to reduce the loan amount, bringing repayments within the acceptable range relative to expected rent.
Deposit and LMI Requirements for Company Borrowers
Company borrowers typically need a minimum 20% deposit, as most lenders do not offer Lenders Mortgage Insurance for corporate entities. Some lenders will consider loans up to 80% loan to value ratio using a standard mortgage insurance structure, but these are less common and often come with higher rates or stricter criteria. The 20% requirement is firm across most of the panel, which means an investor looking at a property near Shailer Park State School would need to bring genuine equity or cash savings to the table rather than relying on a low-deposit strategy.
Interest Rates and Investment Loan Features
Interest rates for company loans are typically 0.20% to 0.50% higher than equivalent personal investment loans. Lenders view corporate structures as higher risk due to the separation between the borrowing entity and the individual guarantors. Variable rate options remain the most commonly used structure, as they offer flexibility to make additional repayments or access offset accounts where available. Fixed rate products are available but less common for company structures, and not all lenders offer them.
Interest only repayments are frequently used by property investors borrowing through a company, as this structure maximises tax-deductible interest and preserves cash flow for further portfolio growth. Where rental income is strong enough to meet serviceability criteria, interest only terms are usually available for five years initially, with the option to renew subject to lender reassessment.
Ready to chat to one of our team?
Book a chat with a Mortgage Broker at Wagstaff Finance today.
Tax and Negative Gearing Considerations Under New Rules
From 1 July 2027, investment loans for established residential properties purchased after 12 May 2026 will be subject to new negative gearing restrictions. Losses on those properties can only be offset against residential property income or capital gains, not against other income such as salary. Companies typically do not have wage income to offset, so this change has less direct impact on corporate structures than it does for individual investors using negative gearing to reduce personal tax.
However, the capital gains tax changes do affect company borrowers. The 50% CGT discount available to individuals does not apply to companies at all. Companies pay tax on the full capital gain at the company tax rate, currently 25% for base rate entities or 30% otherwise. For investors weighing up whether to buy in their own name or through a company, this tax treatment becomes a critical factor. If your strategy involves building wealth through long-term capital growth rather than active trading, personal ownership may deliver more favourable tax outcomes on the eventual sale.
Refinancing and Accessing Equity in a Company Structure
Releasing equity from a property held in a company name follows the same serviceability principles as the original purchase. The lender will assess whether the increased loan amount can be serviced by rental income alone. If you are refinancing to access equity for a deposit on another property, the combined portfolio must demonstrate adequate income across all holdings. Lenders assess the portfolio as a whole, so a property with strong rental yield can support another with weaker income, provided the aggregate position meets serviceability.
If you are considering an investment loan refinance, it is worth reviewing your current structure and whether the company arrangement still serves your goals. Some investors shift properties out of a company structure and into personal names, or vice versa, as their circumstances change. Both strategies involve stamp duty and legal costs, so the benefits need to outweigh the transaction expenses.
When a Company Structure Makes Sense for Property Investment
A company structure is most useful when asset protection is a priority, when you are building a portfolio that will eventually include commercial property, or when you plan to involve other investors or family members as shareholders. For a single residential investment property in Shailer Park with no immediate plans to expand, the additional costs and complexity may not be justified. The higher interest rate, the absence of the CGT discount, and the limited ability to claim losses against personal income reduce the financial appeal unless there are strong non-tax reasons to proceed.
If you are a business owner with existing trading entities, consolidating investment property within that structure may make sense from an administrative perspective, but only if the business operates profitably and does not expose the property to business-related liabilities. Many investors prefer to establish a separate company solely to hold property, keeping it quarantined from trading risk.
Call one of our team or book an appointment at a time that works for you. We work with clients across Shailer Park, Logan, and the broader Brisbane region to structure investment property finance in a way that aligns with your goals and meets lender requirements.
Frequently Asked Questions
Can I borrow in a company name with less than 20% deposit?
Most lenders require a minimum 20% deposit for company borrowing as Lenders Mortgage Insurance is not widely available for corporate entities. A small number of lenders may offer up to 80% LVR, but these options are limited and typically come with higher rates.
Do lenders assess my business income when I borrow through a company?
Lenders primarily assess the rental income from the property being purchased, not business income or director earnings. The property must generally service the loan on its own, with rental income covering repayments plus a buffer.
How does the CGT discount work for property held in a company?
Companies do not receive the 50% capital gains tax discount available to individual investors. Companies pay tax on the full capital gain at the company tax rate, which is 25% or 30% depending on the entity type.
Are interest rates higher for company investment loans?
Yes, interest rates for company loans are typically 0.20% to 0.50% higher than equivalent personal investment loans. Lenders view corporate structures as higher risk due to the separation between the borrowing entity and individual guarantors.
Can I use negative gearing if I borrow in a company name?
Companies can still claim rental losses, but companies typically do not have wage income to offset. Under the new rules from July 2027, losses on established residential properties can only be offset against residential property income or capital gains, not other income.
