Unlock the Secrets to Borrowing in a Company Name

Why Fraser Rise Investors Consider Company Structure Borrowing

Borrowing through a company structure allows the company to hold legal title to the investment property and assume the debt directly. Fraser Rise has seen considerable investor interest over recent years, particularly in newer estates near Fraser Rise Boulevard and the town centre precinct, where rental demand from families remains consistent. For investors building a portfolio or concerned about asset protection, the question of whether to borrow personally or through a company structure comes up regularly.

The decision turns on liability protection, tax planning, estate considerations and financing cost. A company is a separate legal entity, which can limit personal exposure if structured correctly. However, lenders view company borrowing differently to personal lending, particularly since mid-2026 when changes to negative gearing and capital gains tax treatment took effect for certain residential property purchases.

How Lenders Assess Company Structure Investment Loans

Lenders assess a company's borrowing capacity based on the income of the company and the personal income of directors who provide guarantees. Most residential investment loans structured through a company require at least one director to act as guarantor, which means the director remains personally liable for the debt despite the loan being in the company's name. Lenders will apply the same serviceability buffer, currently 3.0 percentage points above the loan product rate, to company applications as they do to personal borrowing.

Companies that generate rental income or trading income may service the loan from company cashflow, but lenders still typically require director guarantees and assess the directors' personal capacity to meet repayments if company income is insufficient. This dual assessment can limit how much the company can borrow, particularly where directors already carry personal debt.

Debt-to-income limits introduced in February 2026 apply separately to owner-occupier and investor loan portfolios. For investor lending, lenders may extend up to 20 per cent of new loans to borrowers with a total debt-to-income ratio of six times or greater. Company borrowing for residential investment is captured within the investor lending limit, and the DTI calculation includes all debts held by guarantors personally and by the company.

The Legislative Shift That Changed Company Investment Borrowing

From the 2027-28 income year, losses related to established residential investment properties acquired after 12 May 2026 can only be offset against income from other residential properties, not against salary, business income or other sources. Properties held by companies are subject to this rule in the same way as properties held by individuals or trusts. Eligible new builds, where construction occurs on previously vacant land or increases the number of dwellings on a site, remain exempt and continue to allow full loss offset.

For a company purchasing an established investment property in Fraser Rise after 12 May 2026, any net rental loss in a given year can be carried forward and used to offset future residential property income or capital gains on residential property. The company cannot offset that loss against trading income or other investment income. This changes the cashflow equation for company investors who previously used rental losses to reduce overall company tax.

Capital gains realised by a company are taxed at the company tax rate without access to the 50 per cent discount available to individuals. From 1 July 2027, gains on affected assets held by companies will continue to be taxed at the company rate, while individuals, trusts and partnerships will use cost base indexation and face a 30 per cent minimum tax rate on real gains accruing from that date. Companies do not benefit from indexation under the new arrangements and do not pay the minimum rate, because the company rate already exceeds 30 per cent.

Interest Rate Pricing and Loan Structure for Company Borrowers

Company loans generally attract a rate premium compared to personal borrowing for the same property. Lenders apply higher risk weights to investor loans under Prudential Standard APS 112, and company structure borrowing typically incurs an additional margin of 0.30 to 0.80 percentage points depending on the lender and the strength of the application. The premium reflects the lender's assessment of credit risk, the reduced transparency of company financials compared to individual PAYG income, and the potential for directors to limit their exposure through corporate structure.

Some lenders offer both variable and fixed rate options for company investment loans, while others restrict company borrowing to variable rates only. Interest-only periods remain available but are often capped at five years for company borrowers, after which the loan reverts to principal and interest unless the borrower applies to extend the interest-only term. Given the changes to loss offset, the tax benefit of maximising deductible interest through interest-only repayments is now confined to properties that generate or will generate enough residential property income to absorb those losses.

Borrowers considering a refinance from personal name to company structure, or from one lender to another while in company name, should be aware that refinancing triggers a new application and the loan will be assessed under current policy settings, including DTI limits where applicable.

Loan to Value Ratio and Lenders Mortgage Insurance in Company Lending

Most lenders cap company structure investment loans at 80 per cent loan-to-value ratio, meaning a 20 per cent deposit is required. Some lenders may extend up to 90 per cent LVR where the borrower is willing to pay Lenders Mortgage Insurance, but LMI premiums for company loans are higher than for personal loans at the same LVR, and not all LMI providers cover company borrowing.

Under APS 112, an offset account balance does not reduce the loan amount for LVR calculation purposes. Where multiple loans are secured over the same property in sequential ranking with no intermediate lender, those loans are aggregated and treated as a single exposure when calculating LVR. This matters for investors using equity from an existing property to fund the deposit on a Fraser Rise investment property held in company name, as the total exposure across both securities will be considered.

Lenders may also require the company to maintain a minimum level of equity or cash reserves, particularly where the company holds multiple properties. These requirements vary between lenders and are not standardised across the market.

Asset Protection and Succession Considerations for Fraser Rise Investors

One reason Fraser Rise investors choose company structure is to separate investment assets from personal assets. If a company holding investment property encounters financial difficulty or legal action, creditors generally have recourse only to the company's assets, not the personal assets of directors, provided the company has been properly managed and the directors have not traded while insolvent.

However, director guarantees, which are required by most lenders for residential investment loans in company name, allow the lender to pursue the director personally if the company defaults. The asset protection benefit applies to other creditors, not to the lender holding the mortgage. For that reason, the liability shield is partial rather than absolute.

Company structure also allows for shares in the company to be transferred or bequeathed without triggering a change in property title, which can simplify succession planning. Transferring shares is generally less costly and complex than transferring property title, though stamp duty and capital gains tax implications still apply depending on the circumstances of the transfer.

When Personal Borrowing May Remain the More Suitable Option

For investors purchasing their first or second property in Fraser Rise, particularly if those properties are new builds or were contracted before 12 May 2026, personal borrowing often provides lower rates, simpler documentation and continued access to the 50 per cent capital gains discount when the property is eventually sold. The discount reduces the effective tax rate on the gain and remains available for individuals, partnerships and trusts, but not for companies.

Personal borrowers who qualify may also access loans for professionals with higher LVR options, reduced documentation requirements and rate discounts not available to company borrowers. Medical practitioners, accountants, engineers and other qualifying professionals can often borrow up to 90 or 95 per cent LVR without LMI or at reduced LMI cost when borrowing personally, whereas the same individual borrowing through a company structure would face standard LVR caps and higher pricing.

Where estate planning or asset protection is not a primary concern, and the investor does not expect to hold a large portfolio in the near term, the cost and complexity of maintaining a company structure, including annual ASIC fees, accounting and tax compliance, may outweigh the benefits. Each investor's circumstances differ, and the suitability of company versus personal borrowing depends on the broader strategy and risk profile, not solely on the features of the loan itself.

Documentation and Compliance Requirements for Company Loan Applications

Lenders require a company to provide its Australian Company Number, proof of registration with ASIC, a copy of the company's constitution or trust deed if applicable, and details of all directors and shareholders. Financial statements for the company, typically covering the most recent two financial years, are required if the company has trading income. Where the company is newly established or holds property only, lenders assess serviceability based on projected rental income and the personal income of guarantor directors.

Directors must provide the same income verification required for personal loan applications, including payslips, tax returns, notices of assessment and evidence of other income sources. If the company operates a business in addition to holding property, lenders may require business activity statements, profit and loss statements and business bank account records.

Where the property will be tenanted, lenders typically require a rental appraisal or signed lease agreement. Most lenders apply a discount to projected rental income, often between 20 and 30 per cent, to account for vacancy periods, maintenance costs and management fees when assessing serviceability. This is separate from the legislated serviceability buffer applied to the interest rate.

Company applicants should also be prepared to demonstrate the source of the deposit. Lenders require evidence that funds are held in the company's bank account or are being contributed by directors as a director's loan or equity injection. Gifted deposits are generally not accepted for company loans.

Weighing the Costs and Benefits Before You Commit

The choice to borrow in a company name is not reversible without refinancing and incurring associated costs. Stamp duty, legal fees, lender application fees and the rate premium over the life of the loan add up, and those costs need to be weighed against the tax, liability and estate benefits the structure may provide.

For Fraser Rise investors building a portfolio with the intention of holding multiple properties long-term, company structure can provide a framework that scales more sustainably than individual ownership. For those acquiring one or two properties as part of a broader wealth strategy, personal ownership often delivers lower cost and greater flexibility. The answer is specific to your circumstances, your risk tolerance, your tax position and your long-term intentions for the properties you acquire.

Call one of our team or book an appointment at a time that works for you to discuss whether company structure borrowing aligns with your investment objectives and how recent legislative changes affect the financing options available to you.

Frequently Asked Questions