11 Property Funding Hacks Every Investor Should Know

Securing funding for property investment can be challenging, but the right strategies can make all the difference. Did you know that alternative lending options have grown by over 20% in the last few years, giving investors more flexibility than ever before?

Understanding these funding hacks can help you access capital faster, negotiate better loan terms, and optimise your investment returns.

Here are 11 essential tips to improve your approach to property funding in Australia.

#1 Shop Around For The Best Real Estate Investment Loan

Lenders offer different rates and terms. Don’t settle for the first option you find. Banks, credit unions, and non-bank lenders compete for your business, so compare interest rates, fees, and repayment flexibility. A small difference in rates can save you thousands over time. Use online tools or brokers to simplify the process.

#2 Utilise Equity Instead of Cash

Smart investors rarely use their own cash for deposits. Instead, they tap into equity from existing properties. This strategy allows you to control more assets with minimal personal capital outlay.

The process involves obtaining a line of credit against your principal residence or other investment properties, which then serves as your deposit fund for new acquisitions.

#3 Understand Cross-Collateralization Risks

Many lenders will suggest cross-collateralizing your properties (using multiple properties as security for one loan). This arrangement benefits the lender more than you.

When your properties are linked through cross-collateralization, refinancing becomes complicated, and selling individual properties requires lender approval. Keeping loans separate gives you greater long-term flexibility and control.

#4 Structure Loans For Maximum Tax Benefits

The way you structure your real estate investment loan can significantly impact your tax position. Interest-only loans maximize tax deductions during the investment phase, while principal and interest loans build equity faster.

Consider setting up an offset account against your home loan while keeping investment loans as interest-only. This arrangement allows you to effectively direct payments toward non-deductible debt first.

#5 Opt For Interest-Only Loans Strategically

Interest-only loans lower your monthly repayments because you’re not paying down the principal yet. This frees up cash for other investments. However, the principal remains unchanged, so switch to principal-and-interest later when your income grows. Timing matters with this hack.

#6 Consider Commercial Property Funding In Australia Options

Commercial property loans offer unique advantages, including longer interest-only periods (often 5-10 years) and potentially higher borrowing capacity.

These loans assess the property's income potential rather than focusing primarily on your personal income, making them attractive for investors with strong property selections but limited personal income.

#7 Use A Mortgage Broker Wisely

Mortgage brokers have access to hundreds of loan products. They negotiate with lenders on your behalf, often securing better deals than you could alone. Since they’re paid by lenders, their service is usually free. Pick one with experience in property funding in Australia for the best results.

#8 Vendor Finance Opportunities

Vendor finance arrangements allow you to purchase property with minimal upfront capital by negotiating directly with the seller. These deals typically involve a smaller initial payment followed by instalments at potentially favourable terms. This approach works particularly well in slow markets where sellers struggle to find buyers or with motivated sellers facing financial pressure.

#9 Strategic Refinancing Timing

Refinancing at the right time can release equity for further investments without additional cash contributions. The optimal refinancing window occurs when your property has gained 20% in value since purchase, allowing you to maintain an 80% loan-to-value ratio while extracting equity. This strategy requires careful market timing and property selection focused on growth areas.

#10 Split Your Loan For Flexibility

A split loan combines fixed and variable rates. You get stability from the fixed portion and flexibility from the variable part. If rates drop, you benefit. If they rise, you’re partly shielded. This balances risk and reward effectively.

#11 Use Superannuation Through Self-Managed Super Funds

Self-Managed Super Funds (SMSFs) provide access to significant capital pools for property investment. SMSF loans have specific requirements, including commercial terms and arm's-length transactions.

This strategy works best for investors with substantial superannuation balances and longer investment horizons, as it combines property investment with retirement planning.

How These Hacks Can Help You?

Funding shapes your investment’s success. A well-chosen real estate investment loan can boost returns, while poor decisions drain profits. What’s the catch? You need to act thoughtfully. Each hack suits different goals, so assess your situation—whether you’re starting out or scaling up.

For instance, leveraging equity works if you’ve built value in a property. New investors might lean on guarantors or grants instead. Combining hacks, like splitting a loan and adding an offset, can amplify savings. The key is personalising them to your finances.

Secure Your Property Funding With Knote

Getting the right funding shouldn’t be complicated. At Knote, we offer quick, reliable property funding in Australia, with personalised assessments and minimal paperwork.

Whether you need a real estate investment loan for commercial land or business property, we provide private funding up to $10,000,000 with fast approvals. Apply today and take the next step in your property investment journey!