Simple hacks to unlock property investment in Marrickville

Lending caps changed in February, and Marrickville investors felt it first

Banks can now only write 20 per cent of their investor loans to borrowers with total debt six times income or higher. That limit kicked in from February and it's knocked out buyers who were borderline on deposit or income, especially around here where two-bedroom units are still pulling over $800,000 and terraces are pushing past $1.5 million. If you're earning $120,000 and already carry $150,000 on your owner-occupied home loan, a $500,000 investment loan tips you past the six-times line and you're caught by the cap.

The caps don't stop you completely, they just mean fewer lenders can say yes. Non-bank lenders aren't covered by the rule yet, and some banks still have quota left each quarter depending on how many high-ratio loans they've already written. Your deposit size matters more now because the higher it is, the lower your loan amount sits relative to income. We're seeing locals refinance their owner-occupied loan to a sharper rate, then use the buffer in their income to qualify for the investment loan separately.

What counts as deposit when you're using equity from Marrickville

You can borrow against the equity in your Marrickville home without selling it. Lenders treat that released equity as your deposit for the new investment property. If your place in Addison Road or Petersham Street is worth $1.3 million and you owe $600,000, you've got $700,000 in equity. Most lenders will lend up to 80 per cent of your home's value without charging you mortgage insurance, so you could access around $440,000 in usable equity after keeping the existing loan in place.

Consider someone who owns a two-bedroom terrace near the station, valued around the local median, with $400,000 remaining on the loan. They want to buy a one-bedroom unit in Dulwich Hill for $720,000. An 80 per cent loan means they need $144,000 deposit plus roughly $30,000 for stamp duty and costs. They pull $180,000 from their Marrickville property by increasing the loan there to $580,000, then structure the investment loan at $720,000 across both properties with separate splits. The equity release is tax-deductible because it's borrowed to buy an income-producing asset, even though the debt sits against the owner-occupied property.

You'll want to split the loans properly so the interest on the investment portion stays deductible and the owner-occupied portion doesn't get tangled up. We set that up through loan splits or separate accounts depending on which lender you're with. Worth checking your borrowing capacity before you commit to a property because the debt-to-income caps apply to the combined loan amount, not just the new bit.

Negative gearing still works if you bought before May last year, and for new builds forever

If you owned your investment property at 7:30pm on 12 May 2026, or it was under contract then, you keep full negative gearing until you sell. That includes properties in Marrickville, Stanmore, Newtown, anywhere. The same rule covers any new build you buy now or later, meaning a property built on vacant land or one that increases the dwelling count on a site. A knock-down rebuild that replaces one house with one house doesn't count, but a knock-down that replaces one house with two townhouses does.

For anything else bought after May last year, losses from the property can only offset income from other residential properties or capital gains on residential sales. You can't use those losses against your wages anymore. The restriction starts applying from the 2027-28 tax year, so if you bought an established unit in Sydenham in August last year, you've got until 30 June this year to claim the loss against your salary, then it switches over.

New builds stay attractive because the negative gearing exemption is permanent and they also get a choice at sale time between the old 50 per cent capital gains discount or the new indexed cost base with a 30 per cent minimum tax rate. That choice alone adds flexibility if you're holding long term and inflation keeps running.

Interest-only cuts your repayments but doesn't cut the debt

Most investors in Marrickville take interest-only terms for the first few years to keep cash flow manageable, especially if they're holding a property that needs some work or they're covering a gap between rent and repayments. Interest-only means you're only paying the interest cost each month and the loan balance stays flat. It doesn't reduce what you owe, but it does reduce what you pay.

On a $600,000 investment loan at current variable rates, the monthly repayment on principal and interest might sit around $3,800. Switch that to interest-only and it drops closer to $2,500. That difference matters when you're covering a $200 monthly shortfall between rent and costs on a Marrickville unit pulling $650 a week. The interest portion is fully deductible either way, so the tax treatment doesn't change. You'll typically get five years interest-only from most lenders, then it flips to principal and interest unless you apply to extend.

One thing to watch is that lenders treat long-term interest-only loans differently for capital purposes if they run past five years and your loan-to-value ratio is above 80 per cent. It doesn't stop you getting the loan, but it might mean a slightly higher rate or a requirement to switch to principal and interest sooner. If you're planning to pay down the loan or sell within five years anyway, it's not a factor.

Vacancy rate in Marrickville stays low but still build a buffer

Marrickville's vacancy rate has been sitting under 2 per cent for most of the past year, which keeps rent steady and turnaround between tenants short. The area pulls strong demand from renters who want the train line, the food strip along Illawarra Road, and the park access without paying Newtown rent. That demand cushions you a bit, but you still need to fund at least a month's gap every year or two when a tenant moves, plus another few weeks if something needs fixing.

Lenders don't assume 52 weeks of rent when they assess your loan. Most apply a vacancy factor, usually around 4 to 6 weeks a year, and they'll also shave your claimed rent by a small margin to account for the risk that you've overestimated. If you're telling them the property rents for $700 a week, they might assess it at $650 and assume $600 after vacancy. That flows into your serviceability and borrowing limit, so it's worth being conservative when you're running the numbers yourself.

The rental income helps you borrow more compared to buying an investment property with no income, but it's not a dollar-for-dollar addition. Some lenders add 80 per cent of the net rental income to your borrowing capacity, others use 100 per cent but apply a higher vacancy rate or discount. That's one area where working with a mortgage broker in Marrickville gets you a better outcome, because we know which lenders assess rental income more generously and we structure the application around that.

Fixed or variable matters more now the rate gap has tightened

Variable rates on investment loans are still priced higher than owner-occupied variable rates, usually by 0.3 to 0.5 per cent depending on your loan size and deposit. Fixed rates for investors have come down a bit over the past six months and the gap between fixed and variable is narrower than it was a year ago. You're not locking in a huge saving anymore by fixing, but you are locking in certainty.

If your investment property is neutrally geared or close to it, a rate rise of 0.5 per cent might tip you into paying $150 a month more out of pocket. That adds up over a year. Fixing for two or three years caps that risk, though you'll pay a break cost if you want to refinance or sell before the fixed term ends. Variable gives you the offset account option, which can be useful if you're parking rental income or saving for the next deposit, because the offset reduces the interest you're charged without affecting the deductibility of the loan.

Some investors split the loan 50/50 between fixed and variable to get a bit of both. It's not a hack, just a hedge. The variable portion gives you flexibility to make extra repayments or redraw, the fixed portion gives you a floor on your repayment for part of the loan. We set that up as two separate loan accounts under the one facility so you're not paying two sets of fees.

Stamp duty and holding costs are claimable in different years

Stamp duty on the property purchase isn't deductible up front. It gets added to your cost base and reduces your capital gain when you sell. That means you're waiting years to see the benefit, but it does reduce the taxable profit at the end. If you paid $28,000 stamp duty on a $720,000 unit, your cost base is now $748,000 before you add any other capital costs like selling agent fees or improvements.

Ongoing costs like council rates, strata fees, landlord insurance, property management, water, and loan interest are claimable in the year you incur them, as long as the property is rented or genuinely available for rent. Repairs are claimable in full in the same year, but improvements that add value or extend the life of the property need to be depreciated over time. Replacing a broken hot water system is a repair, installing a new kitchen is an improvement.

You can also claim depreciation on the building and the fixtures inside it, even if you bought the property established. The building depreciation only applies to properties built after 1985 if you're a subsequent owner, but the fixtures and fittings depreciation still works regardless of build date. A quantity surveyor's report costs around $600 to $800 and it's tax-deductible. The report usually finds enough depreciation in the first few years to cover its own cost several times over.

When refinancing your investment loan makes sense

Refinancing an investment loan works the same way as refinancing your home loan. You're moving the debt to a different lender to get a lower rate, access better features, or release more equity for the next purchase. Rate discounts on investment loans vary a lot between lenders and the gap has widened over the past year as banks compete harder for investment lending under the new debt-to-income caps.

If you're on a variable rate above 6.5 per cent and you've been with the same lender for more than two years, there's a strong chance you can shave 0.4 to 0.7 per cent by switching. On a $600,000 loan, that's around $200 to $300 a month. Refinancing also resets your interest-only period if you've rolled onto principal and interest and you want to extend the interest-only term for another few years.

The cost to refinance includes application fees, valuation, and discharge fees from your current lender. You're usually looking at $1,000 to $1,500 all up, sometimes less if the new lender rebates part of it. Settlement takes four to six weeks once you're approved. If your current loan has an offset account and you're using it, make sure the new loan includes one too, or you'll lose that benefit. Some lenders don't offer offset on investment loans, others do but charge a higher rate or annual fee for it.

Call one of our team or book an appointment at a time that works for you. We'll run through what you're holding now, what you're planning next, and which lenders are going to get you there without the runaround.

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