The property type you choose as an investment shapes everything from how much you can borrow to how lenders assess your application.
A two-bedroom unit in Palm Beach appeals to different lenders than a house in Currumbin, and the loan structure that works for a duplex in Elanora won't necessarily suit a commercial conversion in Coolangatta. Understanding how lenders view different property types helps you choose an investment that supports your goals rather than limiting them.
How Lenders Assess Different Property Types
Lenders base their lending decisions on two things: how much rent the property can generate and how saleable it would be if things went wrong. A standard three-bedroom house in a coastal suburb typically receives the most favourable assessment. Units attract more scrutiny depending on the size of the complex and the body corporate arrangements. Properties with commercial elements, dual occupancy setups, or non-standard features often require specialist lenders who understand those asset classes.
Consider a buyer looking at a renovated unit in one of the older Palm Beach complexes near the esplanade. The property might generate strong rental income due to its location and presentation, but if the complex has more than 50 units or a history of body corporate disputes, some mainstream lenders will either decline the application or apply a higher interest rate and lower loan to value ratio. Knowing this before you make an offer means you can structure your investment loan application with a lender who actually wants that type of security.
Units and Apartments in Palm Beach
Units in Palm Beach offer an accessible entry point for property investors, particularly those building their first portfolio or leveraging equity from an existing home. The suburb's proximity to the beach, cafes along Jefferson Lane, and the relatively tight vacancy rate make it appealing for long-term tenants and holiday renters alike.
Lenders typically lend between 80% and 90% of the property value for a standard unit, depending on your deposit and the size of the complex. Smaller complexes with under 20 units generally receive better terms than large high-rise buildings. If you're buying in a complex with short-term holiday letting, some lenders will assess rental income more conservatively or require a larger deposit to offset the perceived risk of variable occupancy.
Body corporate fees also affect your borrowing capacity. A unit with quarterly fees of $1,800 reduces your serviceability in the same way a higher interest rate would. Lenders subtract those fees from your rental income before calculating whether you can afford the loan repayments, so a property with lower ongoing costs may actually allow you to borrow more than a property with higher rent but steep body corporate charges.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at Living Home Loans today.
Houses and Duplexes for Portfolio Growth
Houses typically offer stronger capital growth potential and fewer lending restrictions, but they require a larger deposit and higher rental income to service the loan. A three-bedroom house in nearby Currumbin or Elanora might cost more to enter than a Palm Beach unit, but it provides flexibility for future subdivision, renovation, or dual income arrangements that units can't match.
Duplexes sit somewhere between units and houses in terms of lender appetite. If the duplex is on a single title and you're buying both sides, most lenders treat it as a standard residential property. If it's on two separate titles or you're only purchasing one side, some lenders apply stricter lending criteria or lower loan to value ratios. The advantage is that rental income from two tenancies can improve your serviceability, especially if one side has a slightly higher rent due to size or aspect.
In our experience, buyers often underestimate how much a second income stream from the same property improves serviceability for future purchases. That additional rental income increases your borrowing capacity when you're ready to acquire your next investment, which matters more than most people realise when building a property portfolio over time.
New Builds Versus Established Properties After the Budget Changes
The May 2026 Federal Budget introduced significant changes to how capital gains tax and negative gearing apply to residential investment properties purchased after Budget night. If you buy an established property from 13 May 2026 onwards, you'll no longer receive the 50% CGT discount or the ability to offset rental losses against your wage income from 1 July 2027. New builds, however, retain both benefits, and investors can choose whichever CGT treatment is more favourable.
This shifts the investment equation considerably. A new townhouse or unit in a development near Palm Beach now offers a distinct tax advantage over an established property at the same price point. The trade-off is that new builds often achieve lower rental yields in the first few years and may not experience the same capital growth as established homes in tightly held suburbs. Your decision depends on whether you're prioritising cash flow, tax deductions, or long-term capital appreciation.
If you're weighing up whether to buy new or established, it's worth speaking with both a mortgage broker and a tax adviser before you commit. The tax benefits of a new build might justify a slightly lower rental return, or they might not depending on your income level and investment strategy. Each situation is different, and the numbers need to run properly before you make an offer.
Commercial and Mixed-Use Properties
Commercial properties and mixed-use buildings operate under different lending rules. Lenders assess commercial investments based on the lease terms, tenant quality, and the property's ability to generate income independently of your personal circumstances. Loan to value ratios are typically lower, often capping at 70% to 80%, and interest rates tend to sit higher than residential investment rates.
A mixed-use property with a retail tenancy on the ground floor and a residence above can work well in Palm Beach's village-style precinct, but you'll need a lender experienced in commercial lending to structure the loan properly. Some lenders will split the loan into a residential portion and a commercial portion, each with different rates and terms. Others will treat the entire property as commercial, which affects your repayment structure and your ability to claim certain tax deductions.
Commercial properties also fall outside the recent Budget changes to negative gearing and capital gains tax, meaning you retain full negative gearing benefits and the existing CGT discount regardless of when you buy. That makes them worth considering if you're an experienced investor looking to diversify beyond residential property, though they're generally not suitable for first-time investors due to the complexity and higher deposit requirements.
Choosing the Right Loan Structure for Your Property Type
Once you've chosen a property type, the loan structure matters just as much as the property itself. Interest only repayments suit investors prioritising cash flow or planning to sell within a defined timeframe, while principal and interest loans reduce your debt over time and may offer access to slightly lower interest rates.
Variable rate loans provide flexibility to make extra repayments or access redraw facilities, which can be useful if you're planning renovations or want the option to pay down debt faster. Fixed rate loans lock in your repayment amount for a set period, which helps with budgeting but limits your ability to make extra repayments without incurring break costs. Many investors use a split loan structure, fixing part of the loan for stability and leaving part variable for flexibility.
Your property type influences which structure works for you. A new build with strong tax deductions and a tight rental market might suit an interest only loan to maximise cash flow in the early years. An established house in a suburb with steady capital growth might benefit from principal and interest repayments to build equity faster, particularly if you're planning to leverage that equity for your next purchase.
If you're considering refinancing an existing investment or comparing investment loan options across different lenders, it's worth reviewing how your current structure aligns with your property type and long-term goals. Small changes to your loan structure can have a material impact on your cash flow and your ability to grow your portfolio over time.
Call one of our team or book an appointment at a time that works for you. We'll walk through the lending options available for the property type you're considering and structure your application to support your next step and the ones after that.
Frequently Asked Questions
Do lenders treat units differently to houses for investment loans?
Yes, lenders typically apply stricter lending criteria to units, particularly in large complexes or buildings with high body corporate fees. Houses generally receive more favourable loan to value ratios and interest rates, though units can still be a solid investment if the complex is well-managed and the location supports strong rental demand.
How do the recent Budget changes affect new builds versus established properties?
From 1 July 2027, established properties purchased after 12 May 2026 will no longer receive the 50% CGT discount or full negative gearing benefits. New builds retain both benefits, and investors can choose the most favourable CGT treatment. This makes new builds more attractive from a tax perspective, though rental yields and capital growth still need to be considered.
Can I use an interest only loan for any investment property type?
Most lenders offer interest only loans for standard residential investment properties, including houses, units, and duplexes. Commercial and mixed-use properties may have different repayment structures depending on the lender. Your choice between interest only and principal and interest should align with your cash flow needs and long-term investment strategy.
What deposit do I need for an investment property in Palm Beach?
Most lenders require a minimum 10% to 20% deposit for investment properties, though you may need more for units in large complexes or properties with non-standard features. A larger deposit improves your interest rate and avoids Lenders Mortgage Insurance, which is typically required if you borrow more than 80% of the property value.
How do body corporate fees affect my borrowing capacity?
Lenders subtract body corporate fees from your rental income when calculating serviceability, which reduces how much you can borrow. A property with lower body corporate costs may allow you to borrow more than a property with higher rent but steep quarterly fees, so it's worth factoring this into your property selection.
