Unlock the secrets to borrowing in a company name

Borrowing through a company name for property investment gives you a structural layer between your personal assets and your investment portfolio.

That separation can matter when you're building a portfolio, running a business, or planning for succession. But lenders treat company loans as commercial lending, even when the property is residential, and that changes the interest rate, the serviceability test, and the deposit you'll need.

Why investors borrow in a company name

A company structure protects your personal assets if something goes wrong with the investment. If the company defaults, the lender's recourse is generally limited to the company's assets and any director guarantees provided, rather than your personal home or other holdings.

Companies also offer flexibility in ownership succession and estate planning. You can transfer shares without triggering a change in property title, which can save on stamp duty and legal costs down the track. Some investors prefer a company structure for tax planning purposes, especially where they're holding multiple properties or operating an active trading business alongside their property portfolio.

How lenders assess company investment loans

Lenders classify loans to a company as commercial lending, even if the property itself is residential. That puts the loan outside the National Consumer Credit Protection Act, which means you don't have the same access to hardship provisions or responsible lending protections that apply to personal borrowers.

Serviceability is assessed on the company's financials, not just your personal income. In practice, most lenders will still want to see director guarantees and personal income support, especially if the company is a special-purpose vehicle set up to hold one or two properties. But they'll also look at the company's tax returns, profit and loss statements, and cash flow. If the company is newly registered or has limited trading history, you'll need to show strong financials from the directors and any rental income projections.

The borrowing capacity for a company loan is often lower than a personal loan, even with the same income backing it, because lenders apply commercial serviceability buffers rather than the residential 3.0 percentage point buffer that APRA requires for personal loans. Some lenders also apply debt-to-income limits to the directors personally, depending on how they assess the guarantee structure.

Interest rates and loan features for company borrowers

Company investment loans typically sit 0.3 to 0.8 percentage points above residential investor rates, depending on the lender and the property type. Some lenders classify them as low-doc or near-prime commercial products, which pushes the rate higher again.

Variable and fixed rate options are available, but the fixed rate terms are usually shorter than you'd see on a residential loan, often capped at three years. Interest-only periods are common and can run for five years or longer, which suits investors focused on cash flow and tax deductions.

Offset accounts are less common on company loans. Where they're offered, the offset balance usually needs to sit in a company bank account, and you'll need to keep clear records for ATO purposes to show the funds aren't being used for private purposes.

Deposit and LMI for company structures

Most lenders require a minimum 20 per cent deposit for a company investment loan, and many won't lend above 80 per cent loan-to-value ratio at all. Lenders Mortgage Insurance is rarely available for company borrowers, so if you're looking to borrow at 85 or 90 per cent LVR, you'll need to explore personal borrowing structures instead or consider a hybrid model.

Where a lender does offer LMI for a company loan, the premium is higher than it would be on a personal loan at the same LVR, and the approval criteria are stricter. Some lenders will accept a personal guarantee from directors with strong financials in place of a higher deposit, but that reduces the asset protection benefit of borrowing in the company name.

Tax and negative gearing through a company

Companies pay a flat 25 or 30 per cent tax rate, depending on turnover, rather than the marginal tax rates that apply to individuals. If you're earning a high personal income and relying on negative gearing to reduce your taxable income, a company structure can work against you.

Under current rules, losses from properties held in a company stay within the company and can only be offset against the company's other income or carried forward. The tax changes that took effect from the 2027-28 income year don't apply to companies in the same way they apply to individuals, because companies were already restricted in how they could use losses.

Consider an investor who holds three properties in a company. One property is negatively geared by $15,000 per year, and the other two produce a combined positive cash flow of $10,000. The company can offset the $15,000 loss against the $10,000 income, leaving a net loss of $5,000 that the company carries forward. But the directors can't claim that $5,000 loss against their personal salary or business income. If the same investor held the properties personally, the full $15,000 loss could offset their wage income, assuming the properties were acquired before the May 2026 cut-off or qualify as new builds.

Depreciation, interest, and other deductible expenses work the same way in a company as they do personally. You can still claim the full range of holding costs, but the benefit is capped by the company's tax rate and its ability to use the deductions.

When a company structure makes sense

A company structure suits investors who are building a portfolio with strong positive cash flow, where negative gearing isn't the main driver. It also works well where asset protection is a priority, such as professionals in high-liability industries or investors with significant personal wealth they want to quarantine from the investment portfolio.

If you're planning to grow a portfolio and eventually transition it to family members or business partners, a company makes succession simpler. You can transfer shares without changing the underlying loan or property title, and you avoid the capital gains tax that would otherwise be triggered on a personal transfer.

Companies also work for investors who want to separate their investment loans from their personal borrowing, especially if they're planning to refinance or restructure down the track. Once the loan is in the company name, it doesn't count against your personal debt-to-income ratio, which can help if you're applying for an owner-occupier loan or increasing your personal borrowing for other purposes.

Setting up a company loan in NSW

If you decide to borrow in a company name, you'll need to register the company with ASIC before making an offer on a property. Most investors use a standard proprietary limited structure with two directors and two shareholders, which satisfies lender requirements and keeps annual compliance costs low.

You'll need to provide the lender with the company's constitution, ASIC registration certificate, and any trust deeds if the company is acting as trustee. The lender will also require director guarantees and personal financial statements from each guarantor. In NSW, stamp duty on the property purchase is calculated the same way it would be for a personal buyer, but if the company is classified as a foreign person under the Foreign Acquisitions and Takeovers Act, additional duty and surcharges may apply.

Once the loan settles, the company needs to maintain separate accounting records and file annual tax returns, even if the property is the only asset. Mixing personal and company funds can create tax complications and undermine the asset protection the structure is meant to provide.

Call one of our team or book an appointment at a time that works for you. We'll talk through your investment goals, run the numbers on company versus personal borrowing, and connect you with a structure that fits your portfolio and your tax position.

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