As the property market in 2025 shifts under the pressure of higher rates and cautious lending, investors are being forced to get smarter about how they fund their next property. For those who understand the power of leverage and how to control it, property investment remains one of the most powerful wealth-building strategies. This guide explores how to structure investment loans for success without overexposing yourself to risk.
The Role of Leverage in Property Investing
Leverage, or the use of borrowed funds to increase the potential return on investment, is the backbone of most successful property portfolios. But higher leverage also means higher risk. In 2025, most lenders have pulled back on maximum loan-to-value ratios, particularly for interest-only and investor loans. This makes it more important than ever to understand your options and structure them correctly.
Key Loan Features That Can Boost Returns
When it comes to investment lending, loan structure can be the difference between a positively geared property and a cash flow headache. Important options to consider include:
Interest-Only Loans: These free up cash flow during the early stages of ownership, especially while rent and property value appreciate. However, they have a time limit and must be used wisely.
Offset and Redraw Accounts: These are essential tools for smart investors looking to manage cash flow efficiently and reduce interest.
Split Loans: These combine fixed and variable elements to lock in part of your rate while remaining agile for future rate changes.
Cross-Collateralisation (to avoid): Many investors unknowingly tie all their properties together. While it might seem convenient, this structure can limit flexibility and complicate future purchases or refinancing.
Tax Considerations and Deductions
One of the main reasons property investment is so attractive in Australia is the tax benefit. Interest payments, maintenance costs, management fees and depreciation can all be claimed as deductions, which can reduce your taxable income.
But mismanagement or mixed-use properties can complicate claims. That’s why it’s vital to have a broker and tax adviser work together, especially if you’re borrowing in a trust, company or using offset accounts.
Real-Life Strategy Example
One of our clients, a professional couple with equity in their principal place of residence, wanted to purchase an investment duplex. We helped them:
- Release equity to fund the deposit and costs
- Set up an interest-only investment loan with offset
- Use rental income to maintain cash flow while keeping their own home loan unaffected
The result? A high-yield asset with minimal disruption to their personal finances and a new strategy they’re now replicating for future purchases.
Successful property investment in 2025 is about more than finding a good deal. It’s about financing it right. The Brokerage specialises in structuring investment loans that support long-term growth while protecting short-term cash flow. If you’re ready to take the next step in your property journey, talk to us first.
