The easiest way to borrow in a company name

Borrowing in a company name for an investment property limits your lender choice but can protect personal assets and create a cleaner structure for multiple investors.

Most borrowers assume they can walk into any bank and borrow through their company the same way they would in their own name. In practice, fewer than half the lenders on the Australian market will lend to a company for residential investment purposes, and those that do apply stricter serviceability rules and higher rates. The decision to borrow in a company name is driven by asset protection, shared ownership between business partners, or estate planning rather than cost. Once you understand what lenders require and how the tax treatment differs from personal ownership, the structure starts to make sense for the right investor.

Why investors borrow through a company structure

A company separates the investment property from your personal assets. If the property incurs a liability or legal claim, creditors generally cannot pursue your personal home or other assets held outside the company. This matters most for investors who operate a business with material risk, or who are buying property with one or more co-investors who are not family members.

Consider an investor who runs a construction business and wants to buy a two-bedroom apartment with a business partner. They could buy as tenants in common in their personal names, but that exposes each person's home and savings to any claim against the property or the co-owner. Buying through a company means the property sits in a separate legal entity. If one director faces a personal lawsuit, the property is not automatically at risk. The same principle applies when estate planning calls for property to pass to the next generation without triggering a change of ownership for land tax or CGT purposes.

How lenders assess a company investment loan application

Lenders treat company borrowing as higher risk than personal borrowing because a company can be wound up and has no personal income history. Most lenders that offer company loans require personal guarantees from all directors, which means you are still personally liable if the loan defaults. The guarantee removes the limited liability benefit for loan repayment purposes, but it does not undo the asset protection benefit against third-party claims on the property itself.

Serviceability is assessed on the company's rental income and the personal income of the guarantors. Lenders typically apply a discount to the rental income, often accepting only 80 per cent of the market rent, and they do not allow negative gearing losses to offset the guarantors' personal income when calculating serviceability. That means a company structure can reduce your borrowing capacity compared to borrowing in your own name, especially if you were relying on salary income to service a shortfall between rent and loan repayments.

Interest rates and loan features for company borrowers

Company investment loans generally carry an interest rate margin between 0.20 and 0.50 percentage points higher than the equivalent loan in a personal name. Not all lenders offer offset accounts or redraw facilities on company loans, and interest-only periods may be capped at five years rather than the ten years sometimes available to personal borrowers. Variable and fixed rate options are available, but the rate discount you can negotiate is usually smaller.

Some lenders will allow a company to borrow up to 90 per cent LVR with Lenders Mortgage Insurance, but many cap company lending at 80 per cent. If you are buying a property at the current median and can only access 80 per cent LVR, you will need a 20 per cent deposit plus settlement costs including stamp duty and legal fees. In our experience, clients structuring through a company often have access to that equity from other investments or business retained earnings, so the lower LVR is less of a barrier than the serviceability assessment.

Tax treatment and the loss of negative gearing from 1 July 2027

A company does not receive the CGT discount available to individuals. When the company sells the property, the full capital gain is taxed at the company tax rate of 25 per cent for base rate entities or 30 per cent for other companies. Individuals who hold investment property in their own name and sell after 1 July 2027 will have gains accruing from that date taxed using cost base indexation and a minimum 30 per cent rate on real gains, replacing the previous 50 per cent discount.

From 1 July 2027, net rental losses on residential investment properties acquired on or after 7:30pm AEST on 12 May 2026 cannot be offset against other income for individuals, partnerships, companies or most trusts. Losses are quarantined and can only be offset against future residential rental income or future residential property capital gains. This removes the tax benefit of negative gearing for company investors in the same way it does for personal investors, unless the property is an eligible new build. Companies do not benefit from franking credits in the same way individuals do when distributing losses, so the quarantining has a similar cash flow impact regardless of structure.

When a company structure still makes sense after the tax changes

The loss of negative gearing from 1 July 2027 reduces the tax advantage of holding investment property in any structure, but it does not change the asset protection or succession planning benefits of a company. If you are buying with a business partner, a company remains the cleaner structure because it allows you to issue shares in proportion to each investor's contribution and to document decision-making rights in a shareholders' agreement.

For investors buying eligible new builds, negative gearing is still available regardless of structure. If the company is purchasing a newly constructed apartment or a property on vacant land where the dwelling count increases, rental losses can still be offset against other income, and the investor can choose between the 50 per cent CGT discount or indexation with the 30 per cent minimum rate. That makes a company structure viable for investors targeting new stock, provided the lender's serviceability assessment still works.

Refinancing a company investment loan

Refinancing a company loan follows the same assessment process as a new application. The lender will require updated financial statements for the company, personal financial statements from each guarantor, and a current rental appraisal. If the property has increased in value and your loan balance has reduced, you may be able to release equity to fund a deposit on a second investment property or to invest in your business.

Because fewer lenders compete for company lending, the rate discounts available on refinance are smaller than those available to personal borrowers. Even so, if your existing loan is on a rate more than 0.30 percentage points above the current market, refinancing can reduce your interest cost over time. Some borrowers also refinance to move from a lender that does not offer offset or redraw to one that does, which improves cash flow management for the company.

If you are considering borrowing in a company name or refinancing an existing company loan, call one of our team or book an appointment at a time that works for you. We work with the lenders that actually approve company structures and can model the serviceability and rate outcome before you commit to the structure.

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