Maximizing Simon’s Borrowing Power for a $700,000 Investment Property

Simon is 62 and has a combined annual income of $109,200: $52,000 from employment, $36,400 from income protection, and $20,800 from renting a granny flat. He owns a Mudgereeba home valued at $1.3 million with a $500,000 mortgage, leaving $800,000 in equity. With no other debts and zero savings, Simon can access up to $540,000 of that equity (80% LVR) or tap $140,000 from his superannuation for a 20% deposit.

Standard serviceability rules suggest a borrowing capacity of about $400,000–$420,000. However, including projected rental income from the new property (assumed 4.5% yield) lifts his capacity to approximately $560,000—enough to target a $700,000 purchase once the deposit is secured.

Repayments on a $560,000, 15-year variable-rate loan would be around $4,280 per month. Against that, rental income of $2,625 per month reduces his net out-of-pocket cost to about $1,655 monthly—a figure Simon can manage with disciplined budgeting.

Recommended Next Steps

Consult a mortgage broker to compare investment loan products and interest rates.
Use either available home equity or $140,000 from superannuation for a 20% deposit.
Opt for a 15-year variable-rate investment loan with an offset account to minimise interest charges.
Plan for the end of income protection cover at age 65 by building additional cash reserves.
Maintain consistent rental income and set aside funds for potential vacancies or maintenance.

By leveraging his existing equity, accessing superannuation where appropriate, and structuring his loan smartly, Simon can confidently acquire a high-yield Queensland investment property and continue growing his wealth as he approaches retirement.

Explore opportunities and assess your borrowing potential here to develop a tailored plan for financial success.

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