The easiest way to buy a rental property in Craigieburn

If you're considering buying a rental property in Craigieburn, the first question is usually how much you can borrow and what that loan will cost you.

An investment loan is structured differently to an owner-occupier home loan because the lender knows you won't be living in the property. That means slightly different interest rates, a closer look at your existing debts, and an assessment that includes the rental income you expect to receive. Most lenders will assume the property is vacant for part of the year and will only count 80 per cent of the projected rent when they calculate what you can afford to repay.

How lenders assess investment loan applications

Lenders assess your borrowing capacity by looking at your income, existing debts, living expenses, and the rental income from the property you're buying. They add a buffer of 3 percentage points to the loan's interest rate to make sure you can still afford the repayments if rates rise. They also apply a debt-to-income limit, which means the total amount you owe across all loans, including the new investment loan, can't exceed six times your annual income in most cases unless you fall within a small exception band the lender is allowed to use.

For a Craigieburn property, lenders typically assess rental income based on a rental appraisal from a licensed property manager in the area. Craigieburn sits in the 3064 postcode and has seen steady demand from families and renters working in Melbourne's northern industrial and logistics hubs. A three-bedroom house in the Highlands or Atherstone estates might rent for around $450 to $500 per week, but the lender will only count 80 per cent of that figure when they run the numbers.

Consider a buyer who earns $95,000 per year, has $40,000 in savings, and wants to buy a rental property with a 10 per cent deposit. The property is appraised to rent for $480 per week. The lender will assess rental income at $384 per week, or roughly $20,000 per year. They'll combine that with the buyer's salary and subtract existing debts, living costs, and the new loan repayment calculated at the loan rate plus 3 percentage points. If the buyer has a car loan or credit card with a high limit, that will reduce how much they can borrow. The buffer and the debt-to-income limit mean many investors borrow less than they expected, especially if their salary alone isn't enough to service the loan without relying heavily on rent.

Interest rates and loan structure for rental properties

Investment loan interest rates sit slightly higher than owner-occupier rates because lenders classify them as higher risk. The difference is usually between 0.20 and 0.50 percentage points, depending on the lender and your deposit size. You can choose between a variable rate, a fixed rate, or a split loan that combines both.

Most investors in Craigieburn choose a variable rate because it offers flexibility to make extra repayments or access an offset account. An offset account is a transaction account linked to your loan. Every dollar in the offset reduces the balance on which interest is calculated, which can save you thousands over the life of the loan while keeping your cash accessible. Some investors prefer to fix part of their rate for two or three years to lock in repayment certainty, especially if they're borrowing close to their limit and want to avoid bill shock if rates rise.

You'll also need to decide between interest-only and principal-and-interest repayments. An interest-only loan means you only pay the interest portion each month, which keeps your repayments lower and can improve your cash flow in the early years. Most lenders allow interest-only periods of up to five years on investment loans. After that, the loan reverts to principal and interest, and your repayments increase. Principal-and-interest repayments are higher from the start, but they reduce your loan balance over time and build equity faster. The option you choose depends on whether you're focused on short-term cash flow or long-term wealth building. If you're planning to hold the property for decades and want to own it outright eventually, principal and interest makes sense. If you're focused on building a portfolio and plan to use equity to buy again in a few years, interest-only can give you more breathing room.

What deposit do you need and how does LMI work?

Most lenders will lend up to 90 per cent of the property value for an investment loan, which means you need at least a 10 per cent deposit plus costs. If you borrow more than 80 per cent of the property value, you'll need to pay Lenders Mortgage Insurance. LMI protects the lender if you default, and the premium is calculated based on your loan amount and loan-to-value ratio. The premium can be capitalised into the loan or paid upfront.

If you already own a home in Craigieburn or elsewhere and have built up equity, you may be able to use that equity as part or all of your deposit. Equity is the difference between what your property is worth and what you owe on it. Lenders will allow you to borrow against that equity, up to 80 per cent of the property's value in most cases, without needing to pay LMI. Releasing equity to fund an investment purchase is common, but it does increase the debt secured against your existing home, so it's worth understanding the risk before you proceed. A broker can help you structure the loans so your existing home loan and your new investment loan are kept separate, which makes it clearer for tax purposes and gives you more control if you need to refinance one loan later on.

Tax treatment and recent changes to negative gearing

One of the reasons people buy investment property is the tax treatment. Interest on your investment loan is tax deductible, along with other costs like council rates, insurance, property management fees, and repairs. If your rental income is less than your expenses, you're negatively geared, and you can usually claim that loss against your other income, such as your salary.

From the 2027-28 income year, the rules around negative gearing will change for established properties purchased after 12 May 2026. If you buy an established rental property in Craigieburn after that date, any loss you make can only be offset against income from other residential properties, not against your wage. Losses can still be carried forward and used in future years when you have rental income or sell the property. If you buy a newly built property, or if you already owned the property before 12 May 2026, the old rules still apply and you can continue to offset losses against your salary. This won't affect every buyer, but it does change the cash flow equation for anyone purchasing an established home as their first or next investment.

Capital gains tax rules are also changing from 1 July 2027. For any gain that builds up after that date, you'll be able to index your cost base for inflation and pay tax only on the real gain above inflation, with a minimum tax rate of 30 per cent on that portion if you're in a lower tax bracket. For newly built properties, you'll be able to choose between the old 50 per cent discount and the new indexed treatment when you sell, whichever gives you a lower tax bill. It's a more generous outcome for investors in new builds, and it's part of the reason new property in estates like Cloverton and Olivine is attracting more interest from buyers planning to hold long-term.

What else you need to know before you apply

An investment loan application will take longer to assess than a standard home loan because the lender needs to verify your rental appraisal, review your tax returns if you're self-employed, and check that your income and existing debts support the borrowing. You'll need to provide payslips, bank statements, tax returns if applicable, and a signed lease or rental appraisal for the property you're buying.

If the property is in a unit or townhouse with a body corporate, the lender will also want to see body corporate records to make sure the building is well managed and there are no large levies or structural issues on the horizon. Some lenders have postcode restrictions or won't lend in certain apartment buildings if they consider the area oversupplied or the building too small. Craigieburn is generally well regarded by lenders because it's an established suburb with a mix of housing types and strong transport links via the Craigieburn train line, but it's still worth checking serviceability early, especially if you're buying a unit or townhouse rather than a house on its own title.

You'll also need to budget for upfront costs beyond the deposit. Stamp duty applies to investment properties at the standard rate in Victoria, and you won't receive any concessions or exemptions that first home buyers might access. Legal fees, building and pest inspections, and lender application fees also apply. If you're paying LMI, that premium is another cost to factor in, and it can run into the thousands depending on your loan size. A mortgage broker can give you a full breakdown of costs once they know your deposit and the property you're looking at, and they can compare loan options from a wide panel of lenders to make sure you're getting a rate and product that suits your situation. You can reach one of our team by calling us or booking an appointment at a time that works for you.

Buying a rental property takes planning, but it's one of the most reliable ways to build wealth over time if you choose the right property and structure your finance carefully. Craigieburn offers a mix of established homes and new builds, steady rental demand, and a location that's close enough to Melbourne to attract tenants but affordable enough to deliver positive cash flow once you factor in rent and tax deductions. Whether this is your first investment or your next one, getting your loan structure right from the start makes everything else easier.

Frequently Asked Questions