Owning more than one investment property can grow your wealth, but each extra loan adds risk as well as opportunity. Before you buy again, it helps to know how lenders view your whole portfolio, not just the new purchase.
This article is for Hobart investors who already own a property and are weighing up the next one. We will cover how lenders assess you, what the tax rules mean, and where the risks sit.
What Are the Benefits of Owning Multiple Investment Properties?
The main benefits are more rental income streams, spread of risk across properties, and more exposure to long-term capital growth. None of these are certain, and each property also brings its own costs.
With two or three rentals, one vacant property does not stop all of your rent. Growth in property value can also build equity you may be able to use later. Interest on money borrowed to buy a rental is generally deductible, along with costs such as council rates, insurance, property management fees and repairs. A property needs to be rented or genuinely available for rent for those costs to be deductible. Your accountant can confirm what applies to you.
How Do Lenders Assess You With More Than One Property?
Lenders look at your total debts and income across every property, then test whether you could still afford repayments if rates were 3.0 percentage points higher. That test is an APRA requirement for banks and other authorised deposit-taking institutions.
As your debts grow, your borrowing capacity shrinks, even if your properties are performing well. Lenders also count only part of your rent. APRA's guidance is that prudent lenders count no more than 80 per cent of expected rent, to allow for vacancies. Banks also face a portfolio limit on lending at six times income or more, which can make some lenders more cautious with highly geared investors. Our borrowing capacity page explains what affects your numbers.
Interest Only or Principal and Interest on a Portfolio
Interest-only repayments are lower at the start, but they do not reduce your debt, and the repayments rise when the interest-only period ends. Lenders also assess you as if you were paying principal and interest over the shorter remaining term, so interest-only does not lift your borrowing capacity.
As an example, consider an investor with a $500,000 loan at an illustrative rate of 6.75% p.a. On interest-only, the repayment is about $2,813 a month. The investor chooses a 30-year loan with a five-year interest-only period to keep cash flow comfortable while renovating. When the period ends, repayments switch to principal and interest over the remaining 25 years. At the same illustrative rate, the repayment rises to about $3,455 a month, an increase of roughly $640 a month, and the balance is still $500,000. The investor planned for that rise by building a cash buffer during the interest-only years. The trade-off is that the debt stays the same size for longer. Only the interest part of a repayment is deductible under either structure. The principal part is not.
Using Equity to Buy the Next Property
You can often use equity in an existing property as the deposit for the next one, but it increases your total debt and ties your properties together. Lenders set their own limits on how much equity you can access.
When total borrowing goes above 80 per cent of a property's value, lenders mortgage insurance is generally required. That is a lender and insurer rule, and the cost depends on the loan amount and your deposit. Interest on money you draw from equity is deductible only if you use that money for an income-producing purpose, such as the deposit on another rental. If you use some for personal spending, that part is not deductible. Our equity release page covers how this works, and a broker can help you structure it so the purposes stay separate.
How Do Negative Gearing Changes Affect a Second or Third Property?
The rules now depend on when you bought. Losses on residential properties you held at 7:30pm AEST on 12 May 2026 can continue to be deducted against your other income, including your salary, until you sell.
For established residential properties bought after that time, from the 2027-28 income year net rental losses can only be deducted against other residential property income, including residential capital gains. Excess losses can be carried forward. Eligible new builds keep access to deductions against all income. Capital gains tax is also changing from 1 July 2027, when the 50 per cent discount is replaced by cost base indexation and a 30 per cent minimum tax rate on gains from that date. These rules are detailed and can change your numbers significantly, so speak with your accountant before you buy.
What Are the Main Risks of Holding Several Properties?
The main risks are rising interest rates, vacancies, unexpected repairs and having too much debt tied to the same lender. Each risk gets bigger when you hold several loans at once.
If rates rise, every variable loan costs more at the same time. If two properties are empty together, your own income has to cover both loans. Keeping a cash buffer, or money in an offset account, helps. An offset reduces the interest charged, though it does not reduce the loan balance for lender LVR calculations.
If you do struggle, tell your lender early. Under the National Credit Code, borrowers with regulated loans can notify their lender of financial hardship, verbally or in writing, and the lender must respond within set timeframes.
Should You Spread Loans Across Different Lenders?
Using more than one lender can avoid having every property secured under one set of conditions, but it means more paperwork and different rules to manage. Whether it suits you depends on your goals and your lenders' policies.
Some investors find that a lender that suits their first property is less suited to their third. A regular review can show whether it is worth refinancing one loan, or you can start with a loan health check across your portfolio. Switching has costs such as discharge and valuation fees, which vary by lender, so compare them with the savings on offer.
Our investment loan team works with lenders across Australia and can map out how a new purchase fits with the loans you already have. Call one of our team or book an appointment at a time that works for you, and we will talk through your Hobart investment plans in a relaxed, no-pressure chat.
Frequently Asked Questions
Does owning more investment properties reduce my borrowing capacity?
Yes, generally. Lenders count all your existing debts and test your repayments at a rate 3.0 percentage points higher, and they usually count only part of your rental income.
Does interest-only increase how much I can borrow?
No. Lenders assess interest-only loans as principal and interest over the remaining term after the interest-only period, so it does not lift borrowing capacity. It only lowers repayments for a time.
Can I still negatively gear a second property?
It depends on when you bought and what you bought. Properties held at 7:30pm AEST on 12 May 2026 and eligible new builds keep current treatment, while later established purchases face limits from the 2027-28 income year. Check with your accountant.
Can I use equity in one property to buy another?
Often yes, depending on the lender and your total debt. Interest on the equity you borrow is deductible only to the extent you use it for an income-producing purpose, and lenders mortgage insurance may apply above 80 per cent.
