Not all property types attract the same lending terms or deliver the same rental returns.
The difference between a house in Newtown and a unit in central Geelong can be thousands of dollars in borrowing capacity, a full percentage point in interest rate, and a completely different conversation with the lender. The property type you choose shapes how much equity the bank will recognise, what rental income they'll count, and whether you'll need Lenders Mortgage Insurance even with a 20 per cent deposit.
Houses and Established Dwellings in Geelong's Inner Suburbs
Houses typically receive the strongest lending terms. Lenders treat them as lower risk, which means you'll usually access the best investor rates and the highest loan to value ratio without restrictions. In suburbs like Newtown, Highton and South Geelong, established houses attract strong tenant demand from families and professionals working locally, which supports consistent rental income.
Consider a buyer looking at a three-bedroom house in Newtown. The lender values the property at the purchase price, accepts 90 per cent of the rental appraisal when calculating serviceability, and offers a variable rate in line with standard investor pricing. The buyer secures an 80 per cent investment loan without LMI and structures the loan as interest only for the first five years to maximise cash flow while the property generates passive income. The tax benefits from negative gearing apply to all loan interest and claimable expenses, which the buyer offsets against their full-time salary.
If the same buyer had chosen a unit in the same suburb, the lender might have reduced the rental income assumption to 80 per cent of the appraisal, increased the interest rate by 0.15 per cent, or required a larger deposit to stay under the loan to value ratio cap.
Units and Apartments in Central Geelong
Units and apartments are treated differently by lenders depending on the size of the building, the body corporate structure, and whether the property sits in a postcode with high investor concentration. In central Geelong, where apartment developments have grown around the waterfront and Moorabool Street, some lenders apply stricter criteria.
A buyer purchasing a two-bedroom apartment in a building with more than 50 units may face a reduced maximum LVR of 80 per cent, even if they have a 20 per cent deposit. Some lenders also apply a higher interest rate or reduce the amount of rental income they'll count when calculating borrowing capacity. The body corporate fees are deductible, but they also reduce net rental yield, which affects how much income the property contributes to serviceability.
In our experience, buyers in this category often need to compare investment loan options from multiple lenders to find one that doesn't penalise apartments in larger complexes. A non-bank lender may offer more flexible terms than a major bank in these situations, particularly if the building is well maintained and the vacancy rate in the area is low.
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Townhouses and Villas in Growth Corridors
Townhouses in areas like Lara, Armstrong Creek and Torquay sit between houses and units in terms of lending treatment. They're generally seen as lower risk than apartments but don't always attract the same terms as freehold houses, particularly if they're part of a large staged development with high body corporate fees.
Lenders will usually lend up to 90 per cent LVR on a townhouse, but they may adjust the rental income calculation depending on the development type and local market. In Armstrong Creek, where new townhouse estates are common, some lenders reduce the amount of rental income they'll accept because they view the area as having higher supply risk. Others treat the property the same as a standalone house if the land title is freehold and the body corporate fees are low.
A townhouse purchased in Torquay with strong holiday rental potential may attract a different assessment again. Some lenders won't count short-term rental income at all, while others will accept it if you can show a consistent rental history over 12 months. This changes the investment loan amount you can access and whether the property will support portfolio growth without requiring additional income or equity release from another asset.
New Builds Versus Established Properties
A new build offers different tax benefits and borrowing conditions compared to an established property. Depreciation on fixtures, fittings and building costs can be claimed for years after settlement, which increases the tax benefits and improves cash flow. Some lenders also offer rate discounts or waive LMI on new builds in certain price ranges, particularly if the property is being purchased in a designated growth area.
Under the proposed negative gearing changes intended to take effect from 1 July 2027, new builds will retain full negative gearing benefits while established properties acquired after 12 May 2026 will have rental losses quarantined and only deductible against residential rental income or capital gains. This makes new builds more attractive from a tax perspective for buyers planning to hold the property long term, but the upfront purchase price is often higher and the rental yield may be lower in the first few years compared to an established house in a similar location.
Buyers considering a new townhouse in Armstrong Creek or a house-and-land package in Lara need to weigh the depreciation and potential stamp duty concessions against the fact that rental demand may take time to stabilise as the area matures. Lenders also apply their own criteria to new estates, and some will reduce the valuation or increase the deposit requirement if they consider the area oversupplied.
Commercial Property and Mixed-Use Investment
Commercial property and mixed-use buildings are assessed under different lending criteria entirely. The loan is usually structured as a commercial loan rather than a residential investment loan, which means higher interest rates, shorter interest-only periods, and a maximum LVR of around 70 per cent. Rental income is assessed using the actual lease terms, and lenders place significant weight on the tenant's financial strength and lease duration.
A buyer purchasing a shop with a residence above it in Belmont or Pakington Street would need to provide a commercial lease agreement, evidence of the tenant's trading history, and a valuation that separates the commercial and residential components. The interest rate may be one to two percentage points higher than a standard residential investor rate, and the loan term is often capped at 15 or 20 years instead of 30.
If building wealth through property is the goal, commercial property can deliver higher rental yields and longer lease terms, but the upfront equity requirement is larger and the exit market is narrower. Most investors treat commercial property as a later addition to a portfolio rather than a starting point.
How Property Type Affects Refinancing and Portfolio Growth
The property type you own now affects what you can borrow in the future. A portfolio weighted toward apartments in the same postcode may limit your ability to access further investment loan products, because lenders apply concentration limits to certain property types and locations. A buyer who owns three units in central Geelong may be unable to borrow for a fourth investment property, even if they have sufficient equity and income, because the lender considers the portfolio too concentrated.
This is where diversity across property types becomes relevant. A mix of a house in Highton, a townhouse in Torquay and a unit in Ocean Grove spreads risk across different tenant markets and reduces the chance that a single lender policy will block future borrowing. When seeking an investment loan refinance, the mix of property types in your portfolio affects which lenders will compete for your business and what investor interest rates they'll offer.
Before committing to a second or third property, it's worth reviewing your existing loan structures and working out how the new purchase will affect your overall loan to value ratio and debt serviceability. A buyer with $200,000 in available equity might be able to leverage that equity into two different properties if they choose the right types and avoid lender restrictions.
The property type you choose should reflect the role that asset will play in your long-term strategy. A house delivers capital growth and borrowing flexibility. A unit delivers rental yield and lower entry cost. A new build delivers tax benefits and potential rate discounts. A commercial property delivers higher income but requires more equity upfront. Each has a place depending on your income, existing portfolio, and what you're trying to achieve over the next ten years.
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Frequently Asked Questions
Do lenders treat houses and units differently for investment loans?
Yes, houses typically receive better interest rates and higher loan to value ratios. Units and apartments may attract higher rates, reduced rental income calculations, or lower maximum LVR, particularly in larger complexes.
Can I use rental income from a new build to support my borrowing capacity?
Most lenders will accept rental income from a new build once it's tenanted and you can provide a lease agreement. Some lenders require a rental history of three to six months before they'll include the full amount in serviceability calculations.
What happens to negative gearing if I buy an established property after May 2026?
Under proposed changes intended from 1 July 2027, rental losses on established properties bought after 12 May 2026 will be quarantined and only deductible against residential rental income or capital gains. New builds will retain full negative gearing benefits.
How does owning multiple units in the same area affect future borrowing?
Lenders apply concentration limits to property types and postcodes. A portfolio with several units in the same suburb may prevent you from accessing further investment loans, even if you have equity and income, because the lender views the portfolio as too concentrated.
Are townhouses treated the same as houses by lenders?
It depends on the title type, body corporate fees, and the development. Freehold townhouses with low fees are usually treated like houses, but those in large estates or with high strata costs may attract tighter lending terms similar to units.
