Understanding the Basics of Investment Loans for Surgeons

Your property investment goals should decide your loan structure, not the other way around. As a maxillofacial surgeon, you may have strong income and limited time. That makes it worth setting the goal first, then choosing the loan to fit it.

This article covers how lenders assess an investment loan, how interest only and principal and interest compare, and how tax rules shape the way you hold property. If you want a broader overview, our page on investment loans for dentists is a good starting point, and the same principles apply to specialists in related fields.

How Do Lenders Assess an Investment Loan Application?

Lenders test whether you could still afford the loan if rates rose. Banks and other APRA-regulated lenders must assess new borrowers at an interest rate at least 3.0 percentage points above the loan's actual rate.

That buffer applies to your total debts, including your home loan, any credit card limits and the new investment loan. Lenders also look at existing debt commitments such as the balance, rate and remaining term. Credit card limits are typically counted using a notional repayment based on the limit, even if you pay the card off each month. Closing unused cards before you apply can lift your borrowing capacity.

Rental income is usually counted only in part. APRA's view is that prudent lenders count no more than 80 per cent of expected rent, to allow for vacancy. Lenders also tend to place less weight on a rental appraisal for a new purchase than on actual rent received. The exact rules differ between lenders, which is one reason a broker comparison is useful.

Interest Only or Principal and Interest: Which Suits Your Goals?

Interest only keeps repayments lower during the interest only period, but you do not reduce the loan balance. Principal and interest repayments cost more each month and reduce what you owe over time.

Interest only does not increase how much you can borrow. Lenders assess an interest only loan as if you will repay principal and interest over the shorter remaining term. A 30-year loan with a 5-year interest only period is assessed over the remaining 25 years.

As an example, take an investor borrowing $600,000 at an illustrative rate of 6.75% p.a. Interest only repayments would be about $3,375 a month (600,000 x 0.0675 / 12). If that loan then moved to principal and interest over the remaining 25 years at the same rate, repayments would be about $4,145 a month. The investor gains cash flow early, but faces a jump of roughly $770 a month when the interest only period ends, and still owes the full $600,000 at that point. These figures are illustrative only and your rate will depend on your lender and deposit.

The trade-off is clear. Interest only suits a surgeon who wants to direct spare cash to another goal, such as paying down a non-deductible home loan. It is a weaker choice if you plan to hold for decades without a plan for the balance. You can explore the structure on our interest only loans for dentists page.

What Tax Rules Affect Property Investment Goals Right Now?

Interest on money borrowed to buy a rental property is generally deductible while the property is rented or available for rent. Only the interest part of a repayment is deductible, not the principal part.

Negative gearing rules changed in 2026. Losses from residential properties held at 7:30pm AEST on 12 May 2026 can still be deducted against other income, including salary, until the property is sold. Losses from eligible new builds acquired after that date can also still be deducted against all income. For established residential properties bought after that time, net rental losses are deductible only against other residential property income from the 2027-28 income year. Excess losses can be carried forward.

For a surgeon on a high salary, this means the type of property and the purchase date matter more than before. Capital gains tax also changes from 1 July 2027, when the 50 per cent discount is replaced by cost base indexation and a 30 per cent minimum tax rate on gains accruing from that date. Please speak with your accountant before you buy, as outcomes depend on your own circumstances and are not certain.

How Does Borrowing Against Existing Equity Work?

You can borrow against the equity in your current property to fund a deposit on an investment. Lenders generally want total debt at or below 80 per cent of the property's value to avoid lenders mortgage insurance (LMI), but each lender sets its own limits.

The key point is how the borrowed money is used. Under ATO ruling TR 2000/2, interest is deductible based on what you do with the funds. Money used for an investment purchase can be deductible, while money used for a private purpose is not. If you mix purposes in one loan account, the deductible portion becomes harder to track.

Consider a surgeon who wants to buy an investment property and also renovate the family home. A cleaner approach is to use separate loan splits, one for the investment and one for the renovation. The investment split carries a clear deductible purpose, the renovation split does not, and the records stay tidy for the accountant at tax time. The outcome is simpler record keeping and less risk of a disputed deduction, though splits may add some set-up work. Our equity release loans for dentists page explains the process in more detail.

Should You Fix, Float or Split the Rate?

A variable rate moves with the lender, while a fixed rate stays the same for a set term. A split loan gives you some of each.

Fixed rates give certainty for budgeting, but breaking a fixed loan early can cost money, and fixed portions may limit extra repayments or offset features depending on the lender. Variable rates offer flexibility but your repayments can rise. Ask each lender how their fixed and split options work before you commit.

If you already hold an investment loan, a review can show whether the rate and features still suit your goals. Our investment loan refinancing for dentists page covers when switching may be worth considering, and you should weigh any discharge, valuation or other switching costs against the possible saving.

Building a Portfolio Without Overextending

Each new purchase reduces the borrowing capacity left for the next one, so plan the sequence before you buy the first property. Lenders count all existing debts when assessing the next loan.

Many surgeons also have a practice or professional commitments that affect income assessment, and a lender may treat self-employed income differently from PAYG income. Setting your goals early, such as the number of properties and your timeframe, lets a broker structure each loan with the next in mind. If you are planning your first purchase, see buying your first investment property, and for later stages, expanding your property portfolio.

Call one of our team or book an appointment at a time that works for you. We will map your property investment goals to a loan structure, compare lenders across Australia and work alongside your accountant so each step fits your wider plan.

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