Good investment research tests the property and the loan together. A suburb can look strong on paper, but your lender decides how much you can borrow and how your rent is counted.
As a clinical pharmacist, you are used to checking the evidence before you act. This article applies the same habit to buying an investment property, so you can work out whether the numbers hold up before you make an offer.
What Research Should You Do Before Buying an Investment Property?
Before buying, research the rent a property can realistically earn, how often similar properties sit empty, and what it costs to hold. Then test those figures against how a lender will assess them.
Start with the vacancy rate for the suburb and property type, and compare asking rents with recent leased properties rather than advertised prices alone. Ask a local property manager what tenants are paying and how long properties take to lease. Add the running costs: council rates, insurance, management fees and repairs. If the property is in a strata complex, include the body corporate levies and check the sinking fund.
If you are still deciding whether to invest at all, our guide to buying your first investment property covers the early steps. Keep your research to numbers you can source yourself. A growth forecast is an opinion, whereas a leased rent is evidence.
How Lenders Count Rental Income and Test Your Borrowing
Banks and other authorised deposit-taking institutions generally count no more than 80 per cent of expected rent, and they test your repayments at a rate at least 3 percentage points above the loan's rate. This means your borrowing capacity will be lower than a quick calculation suggests.
APRA's guidance expects lenders to allow for periods when a property is empty, with a minimum 20 per cent haircut on expected rent. Lenders also tend to rely less on a rental appraisal than on actual rent received. The 3 percentage point buffer applies to new borrowers, including investors.
APRA also limits how much of each bank's new lending can be at a debt-to-income ratio of six times or more. This is a limit on the bank's overall lending, not on you personally. Non-bank lenders are not subject to that limit, although their own policies still apply. Our borrowing capacity page explains what lenders look at in more detail.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at Pharmacist Home Loans today.
Interest Only vs Principal and Interest: A $500,000 Comparison
An interest-only loan has lower repayments during the interest-only period, but it does not reduce what you owe, and it does not increase how much you can borrow. The comparison below uses an illustrative rate of 6.75% p.a., which is not a current offer.
Consider a clinical pharmacist weighing a $500,000 investment loan over 30 years. They are comparing two options.
On principal and interest, the repayment is about $3,243 a month. On interest only for the first five years, it is about $2,813 a month, a difference of roughly $430 a month.
After the five years, the loan moves to principal and interest over the remaining 25 years. The repayment then rises to about $3,455 a month, because the same $500,000 must be repaid in a shorter time. Lenders assess an interest-only loan on this higher repayment, so the lower early repayment does not lift borrowing capacity.
The outcome for this pharmacist is a trade-off. They free up about $430 a month during the first five years, but they carry the full $500,000 into the repayment years and pay a higher monthly amount from then on. Interest on an investment loan is generally deductible under either structure, but the principal part of a principal and interest repayment is not. Speak to your accountant about your own situation. You can read more on interest only loans for pharmacists, and a calculator can show the repayments for your own figures.
What Do the Negative Gearing Changes Mean for Your Numbers?
From the 2027-28 income year, net rental losses on established residential properties acquired after 7:30pm AEST on 12 May 2026 can generally only be deducted against residential property income. They can no longer be deducted against your salary.
This changes how you should read a property's cash flow. Under the new rule, excess losses can be carried forward to offset future residential property income, but they will not reduce the tax on your clinical salary. A property that relies on a loss to stay affordable needs a closer look. Properties you held at that date are grandfathered. Eligible new builds can continue to deduct losses against all income, but that category has conditions, so check that a specific dwelling qualifies. Properties bought between 12 May 2026 and 30 June 2027 can use the current rules until 30 June 2027 only.
The change does not affect whether interest itself is deductible. It affects how a net rental loss can be used. Because tax outcomes depend on your circumstances, confirm the details with your accountant before you buy.
LVR, LMI and Stamp Duty: Costs to Add to Your Research
Borrowing above 80 per cent of the property's value (the loan to value ratio, or LVR) generally requires lenders mortgage insurance (LMI). The 80 per cent figure is where LMI usually starts. It is not a legal limit on borrowing.
Each lender sets its own maximum LVR, and borrowing above 80 per cent needs approval from both the lender and the insurer, subject to serviceability. The LMI premium is paid by the borrower, and it depends on the loan amount and LVR. Lender policies on LMI waivers vary, so confirm the position with each lender, and see our page on LMI waivers for pharmacists. The trade-off is that a smaller deposit means a larger loan, which raises your repayments and the interest you pay.
Stamp duty is set by each state and territory, so check your state revenue office for the figure that applies to your purchase. Add it to your budget along with legal and other purchase costs.
If you already own a home, you may also be thinking about using equity as a deposit. The part of a loan used for private spending is not deductible, so keep any borrowing for the investment separate, and see equity release loans for pharmacists for how this works.
Call one of our team or book an appointment at a time that works for you. We can compare investment loans for pharmacists from lenders across Australia and run your numbers before you commit to a property.
Frequently Asked Questions
How do lenders count rental income on an investment loan?
APRA's guidance expects lenders to count no more than 80 per cent of expected rent, to allow for vacancy. Lenders also tend to rely less on rental appraisals than on actual rent received.
Does an interest-only loan increase how much I can borrow?
No. Lenders assess interest-only loans on principal and interest repayments over the remaining term after the interest-only period. This usually means a lower maximum loan than an equivalent principal and interest loan.
Can I still use negative gearing against my salary?
It depends on the property and when you acquired it. Properties held at 7:30pm AEST on 12 May 2026 and eligible new builds are treated differently from established properties bought after that time, so ask your accountant how it applies to you.
Is 80 per cent LVR the maximum I can borrow for an investment property?
No. It is the point where lenders mortgage insurance is generally required. Borrowing above it is possible only with lender and insurer approval and subject to serviceability, and each lender sets its own limits.
