Do you know how borrowing in a company name works?

Borrowing in a company name changes how lenders assess your application

When you borrow in a company name, lenders assess the company's financial position first, then look to director guarantees and personal income to support serviceability. The company is the borrower, and the directors guarantee the debt personally. This structure separates the investment from your personal name on title, which can offer asset protection and estate planning benefits, though it also changes how rental income and deductions are treated.

How lenders assess a company borrower

Lenders evaluate a company borrower by reviewing the company's financials, including tax returns, profit and loss statements, and balance sheets. If the company is newly established or has limited trading history, lenders rely heavily on director guarantees and the personal income of guarantors to satisfy serviceability requirements. Personal income such as salary, business income, or rental income from other properties is assessed under the APRA serviceability buffer, which requires repayments to be tested at 3 percentage points above the product rate. The company's credit profile is assessed separately to the directors' personal credit, so any adverse listings or judgments against the company will affect the application independently of the directors' credit history.

Consider a scenario where a Croydon-based buyer operates a small consulting business through a company and wants to purchase an investment property in the same suburb. The company has two years of trading history showing steady profit. The lender will assess the company's ability to service the loan by reviewing the profit after tax, adding back non-cash expenses such as depreciation, and applying the serviceability buffer. If the company's income alone is insufficient, the lender will include the director's personal salary and any other verifiable income to meet the required debt service ratios.

Deposit and equity requirements for company borrowers

Company borrowers typically need a larger deposit than individual borrowers. Most lenders cap the loan to value ratio at 80 per cent for companies, meaning a 20 per cent deposit is required. Some lenders will consider higher LVRs if Lenders Mortgage Insurance is available, though LMI for company borrowers is less common and more expensive. Equity in other properties held personally or by the company can be used as security, but cross-collateralisation between personal and company-held assets requires careful structuring. Lenders will assess the combined exposure and may require additional guarantees or limit the total amount advanced.

Tax treatment and rental income

Rental income from a property owned by a company is treated as company income, not personal income. The company is taxed at the corporate tax rate, which is currently 25 per cent for base rate entities or 30 per cent for other companies. Interest on the investment loan is deductible to the company, along with other property expenses such as rates, repairs, and management fees. However, losses generated by the property cannot be distributed to shareholders or offset against their personal income. Losses remain within the company and can only be carried forward to offset future company income, subject to the company satisfying loss carry-back or continuity of ownership rules.

Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, which takes effect from 1 July 2027, negative gearing rules for residential properties acquired on or after 12 May 2026 will be quarantined for individual investors. Company structures are not directly affected by the quarantining provisions, though widely held unit trusts receive a carve-out. This distinction means a company holding residential investment property acquired after that date can still offset rental losses against other company income, though investors should seek advice from a tax specialist to confirm how the rules apply to their structure.

Comparison with trust and individual ownership

Borrowing in a company name differs from borrowing through a trust or as an individual. A trust structure separates legal ownership from beneficial ownership, with the trustee holding the property for the benefit of beneficiaries. Lenders assess trust borrowers by reviewing the trust deed, the trustee's capacity to borrow, and the income and assets of the guarantors. Trusts offer flexibility in distributing income and capital gains to beneficiaries, which can be useful for tax planning. Individual ownership is the most straightforward structure, with the borrower assessed on personal income and the property held in their personal name. The choice between company, trust, and individual ownership depends on asset protection goals, tax planning, and the investor's broader property strategy. Investors with multiple properties or those planning to build a portfolio may find a company structure offers clearer separation and liability management, though the added complexity and cost of maintaining a company should be weighed against these benefits.

Croydon property market and investor activity

Croydon sits within the Maroondah council area and is located approximately 27 kilometres east of the Melbourne CBD. The suburb is serviced by Croydon railway station on the Lilydale line and offers a mix of established homes, townhouses, and unit developments. Investor activity in the area is supported by proximity to Eastland Shopping Centre, Yarra Valley Grammar, and the Eastlink corridor. Vacancy rates in the broader Maroondah region have remained low, supporting consistent rental demand. Investors purchasing in Croydon should consider body corporate fees for units, land size for houses, and rental yield relative to comparable suburbs along the eastern corridor.

When a company structure suits an investor

A company structure suits an investor who operates a business through a company and wants to consolidate property holdings within that entity, or an investor building a portfolio who wants liability quarantined from personal assets. It may also suit investors who plan to hold properties long-term and do not need to distribute income or capital gains to beneficiaries. The structure is less suited to investors who need to distribute income flexibly, those who want to access the 50 per cent capital gains tax discount on properties held before 1 July 2027, or those who prefer simplicity over compliance and reporting obligations.

Application and documentation requirements

An investment loan application in a company name requires the company's Australian Company Number, registered office address, and details of all directors and shareholders. Lenders request two years of company tax returns, financial statements, and a current balance sheet. If the company is newly established, directors provide personal tax returns and payslips to support serviceability. The lender also requires personal identification and financial declarations from all guarantors. A signed director resolution authorising the borrowing and the provision of security is required before settlement. Lenders may also request a copy of the company's constitution to confirm the directors' authority to borrow.

Settlement costs for a company borrower include stamp duty, legal fees, valuation fees, and loan establishment fees. Stamp duty is calculated on the purchase price and does not vary based on whether the buyer is a company, individual, or trust. Lenders typically require a solicitor's certificate confirming the company's capacity to borrow and the validity of the guarantees provided.

If you are considering an investment loan in a company name and want to understand how lenders will assess your application and structure, call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions