Proven Tips to Secure an Investment Unit Loan

Buying an Investment Unit in Busselton: What You Need to Know

Buying an investment unit in Busselton can open the door to passive income and long-term wealth building, but lenders assess unit purchases differently to houses. You'll need a larger deposit, and strata fees will affect how much you can borrow.

The key difference comes down to loan to value ratio (LVR) and serviceability. Most lenders cap investment property finance at 90% LVR, meaning you'll need at least a 10% deposit plus costs. For units specifically, some lenders reduce that to 80% LVR, particularly if the complex has more than 50 units or high owner-occupier turnover. That means you might need 20% upfront instead of 10%, depending on the building.

Consider a buyer who finds a unit in one of the older complexes near Busselton foreshore. The building has 60 units, a mix of holiday rentals and permanent residents, and body corporate fees of around $1,200 per quarter. Even with a 15% deposit saved, their lender pulls back to 80% LVR because of the building size and rental mix. They need to find another 5% deposit or look at a smaller complex where lenders are more comfortable with 90% LVR. That extra requirement can catch investors off guard if they haven't checked the building profile early.

Busselton's appeal as a holiday and retirement destination makes units an attractive option for investors, but you'll want to understand how rental yield and vacancy periods play into the lender's assessment. Local agents report stronger demand for two-bedroom units close to the town centre and beachfront, while one-bedroom units further out can sit vacant longer during off-peak months. Lenders use rental income to help prove you can service the loan, so a unit with a history of short-term holiday lets may be viewed differently to one with a long-term tenant already in place.

How Lenders Assess Your Borrowing Capacity for a Unit

Lenders calculate how much you can borrow by looking at your income, existing debts, living expenses, and the rental income the property is likely to generate. For investment property finance, they typically assess 80% of the expected rent as usable income, factoring in vacancy and maintenance costs.

Body corporate fees are treated as an ongoing expense and reduce your borrowing capacity. If a unit has quarterly fees of $1,500, that's $6,000 a year the lender deducts from your serviceability calculation. On a unit returning $450 per week in rent, the lender applies a shading factor and counts roughly $360 per week, then subtracts the body corporate and any other outgoings like council rates and landlord insurance.

In a scenario like this, an investor earning $90,000 a year with no other debt might assume they can borrow around $500,000. Once the lender accounts for living expenses, the unit's body corporate fees, and the shaded rental income, that figure might drop closer to $420,000. If the investor is targeting a unit near the Busselton Jetty where values have firmed in the past few years, the gap between what they can borrow and what they need becomes a real constraint.

This is where having a conversation with a mortgage broker early in the process makes a difference. We can run the numbers based on the type of unit you're looking at and help you understand whether your deposit and income will get you across the line, or whether you need to adjust your search.

Investment Loan Features That Suit Unit Purchases

You'll generally choose between a variable rate and a fixed rate, and decide whether to make interest only or principal and interest repayments. Each option affects your cash flow and flexibility differently.

Interest only repayments keep your monthly outgoings lower, which can be useful if the unit's rental income doesn't quite cover the loan repayment plus body corporate and other costs. You're only paying the interest charged by the lender, not reducing the loan amount itself. This structure is common for property investors focused on capital growth rather than paying down debt quickly. The trade-off is that you won't build equity through repayments, only through any increase in the property's value.

Principal and interest repayments are higher each month because you're paying down the loan amount as well as the interest. This reduces your debt over time and can be a better fit if you're planning to hold the unit long-term and want to own it outright eventually.

Variable interest rate products generally offer more flexibility. You can make extra repayments, access features like an offset account, and switch between interest only and principal and interest without penalty. Fixed interest rate products lock in your rate for a set period, usually one to five years, which provides certainty around your repayment amount but limits your ability to make extra repayments or access features like redraw or offset.

For a unit in Busselton where rental income might fluctuate seasonally, an offset account linked to a variable rate loan can help. Any rent sitting in the offset reduces the interest you're charged without locking the funds away, so you still have access if the unit sits vacant for a few weeks or you need to cover an unexpected body corporate levy.

The Deposit You'll Need and How LVR Affects Approval

Most lenders will finance up to 90% LVR for investment property purchases, but that drops to 80% for units in certain buildings. You'll also need to cover stamp duty, legal fees, and any Lenders Mortgage Insurance (LMI) if you're borrowing above 80% LVR.

LMI is a one-off cost that protects the lender if you default on the loan. It's calculated based on your loan amount and LVR, and it can add several thousand dollars to your upfront costs. For a unit purchase at 90% LVR, LMI might be $8,000 to $12,000 depending on the property value and lender. Some investors choose to capitalise the LMI into the loan rather than paying it upfront, which increases the total loan amount but keeps more cash available for other costs.

If you're buying a unit in a complex with more than 50 units, or where more than 50% of owners are investors rather than owner-occupiers, expect some lenders to reduce their maximum LVR to 80%. That's a lender risk assessment based on the building's profile, and it means you'll need a 20% deposit to avoid LMI altogether, or accept a higher LMI cost if you proceed at a lower deposit level.

Western Australia's stamp duty applies to investment purchases just as it does to owner-occupied homes, and there's no first-time investor concession. For a unit valued around the median for Busselton, stamp duty and settlement costs combined could be $15,000 or more, so factor that into your savings plan alongside the deposit itself.

Tax Deductions and Cashflow Considerations

Owning an investment property lets you claim a range of expenses as tax deductions, including loan interest, body corporate fees, council rates, landlord insurance, property management fees, and depreciation on the building and fixtures. These claimable expenses reduce your taxable income, which can improve your overall cash flow depending on your marginal tax rate.

For units, body corporate fees are fully deductible, and they can be significant. If you're paying $5,000 a year in body corporate fees, that's $5,000 you can claim. Depreciation is another useful deduction, particularly if the unit is relatively new or has been recently renovated. A quantity surveyor can prepare a depreciation schedule that breaks down the claimable depreciation on the building structure and the fixtures inside, and that deduction applies each year even though you're not spending any actual cash.

Negative gearing used to mean you could offset any loss from your rental property against your wage or salary income. Under the changes announced in the Federal Budget, if you purchased an established unit after 12 May 2026, any loss from that property can only be offset against rental income or capital gains from residential property from 1 July 2027 onwards. You can carry forward excess losses to use in future years, but you won't be able to reduce your taxable wage income with those losses under the new rules. If you're buying a new build unit, you'll have the option to choose between the old 50% capital gains tax discount and the new arrangements, whichever works better for you.

This affects how you model the cash flow from a unit purchase. If you were relying on negative gearing to reduce your tax bill and improve your after-tax position, that benefit is now limited to offsetting other property income rather than your salary. It's worth speaking to an accountant who understands property investment to see how the changes affect your particular situation, especially if you're comparing an established unit to a new build.

Comparing Investment Loan Products Across Lenders

Not all lenders treat unit purchases the same way. Some have stricter LVR limits for certain buildings, others have lower interest rate discounts for investors compared to owner-occupiers, and a few offer better features like offset accounts or the ability to split your loan between variable and fixed rates.

Working with a broker gives you visibility across a wide panel of lenders, so you're not limited to what one bank will offer. We can identify which lenders are comfortable with the building you're looking at, what their maximum LVR is, and whether they'll accept rental income from short-term holiday lets if that's part of your plan. Some lenders in Busselton are more familiar with the local unit market and have better appetite for complexes near the foreshore or in popular holiday precincts, while others pull back if they see high investor concentration or a lot of Airbnb activity.

Rate discounts for investors are typically smaller than for owner-occupiers, but there's still variation between lenders. One lender might offer a variable rate 0.30% higher for investors, another might be 0.50% higher. Over the life of a loan, that difference adds up. If you're borrowing $400,000, a 0.20% rate difference costs you around $800 a year, or close to $20,000 over a typical investment loan term.

Flexibility matters too. If you want the option to switch between interest only and principal and interest, or if you plan to use equity from this unit to fund another purchase down the track, you need a loan structure that supports that. Some lenders let you split your loan so part is fixed and part is variable, giving you some rate certainty while keeping access to features like offset and extra repayments on the variable portion. That structure can work well if you're not sure whether rates will rise or fall, and you want to hedge your position without locking everything away.

Rental Income, Vacancy, and How It Affects Approval

Lenders want to see evidence that the unit can generate rental income, and they'll apply a shading factor to account for vacancy and management costs. Most lenders use 80% of the expected rent in their serviceability calculation, though some go as low as 70% depending on the location and property type.

If you're buying a unit in Busselton that's currently tenanted, the lender will ask for a copy of the lease to verify the rent. If the unit is vacant or you're buying off the plan, they'll ask for a rental appraisal from a licensed property manager. That appraisal needs to be realistic. If the agent says the unit will rent for $450 per week but similar units in the same complex are listed at $400, the lender will use the lower figure or ask for a second opinion.

Vacancy rate in Busselton can vary depending on the time of year and the type of tenant you're targeting. Units close to the town centre and foreshore tend to attract long-term renters and have lower vacancy, while units set up for holiday accommodation might sit empty outside peak summer and school holiday periods. Lenders are cautious with holiday let income because it's less predictable than a signed 12-month lease, and some won't include it in their serviceability assessment at all.

If you're planning to use the unit as a short-term rental, talk to your broker before you apply for finance. Some lenders will assess the income based on a rental appraisal for long-term letting even if you intend to run it as a holiday rental, while others have specific policies around Airbnb and short-stay accommodation that might limit your borrowing capacity or LVR.

When to Consider Refinancing Your Investment Loan

Once you've held the unit for a while and built some equity, refinancing can give you the option to access better rates, release equity for another purchase, or switch your loan structure. Equity release is one of the most common reasons investors refinance. If the unit has increased in value or you've paid down the loan, you might be able to borrow against that equity without selling the property.

For example, if you purchased a unit for $400,000 with a 10% deposit and the property is now worth $450,000, you've gained $50,000 in equity through market growth. If your loan balance has dropped to $340,000 through repayments, you could refinance up to 80% LVR, which is $360,000, and release around $20,000 in usable equity. That equity can be used as a deposit for a second investment property, funding renovation work, or simply held in an offset account to reduce interest costs.

Refinancing also makes sense if your current loan rate is no longer competitive. Investor interest rates change frequently, and the rate you locked in two or three years ago might now be higher than what's available to new borrowers. A broker can review your current loan and compare it to what's available across the market, factoring in any break costs if you're on a fixed rate and any fees associated with refinancing. In many cases, the rate saving outweighs the cost of switching, particularly if you're holding the property long-term.

Call one of our team or book an appointment at a time that works for you. We'll walk through your current situation, the type of unit you're looking at, and the loan structure that suits your goals. Whether you're buying your first investment property or adding to an existing portfolio, we're here to make the process clear and straightforward.

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