Article
Should You Keep Your Old Zetland Unit as an Investment Property?
Written and reviewed by James Chee, CPA · Last reviewed
Thinking of upgrading but keeping your Zetland unit as an investment? Here’s exactly how lenders assess the plan, how much rent they’ll count, and what numbers to check this week before you commit to a second property.
Key Takeaway
Lenders will generally allow Zetland owners to keep their old unit as an investment when upgrading, but they reclassify the first loan as investment debt, shade rental income to around 70–80%, and apply a 3% APRA serviceability buffer to both loans. In high-density areas like Green Square, extra LVR caps and conservative valuations are common, affecting usable equity. The actionable step is to model post-upgrade cashflow and borrowing capacity with realistic rent and costs before signing a contract.
Watch the short answer
How ABN age can affect your chances with the banks
As you weigh up keeping your Zetland unit, this video shows how your ABN age could change what banks let you do next.
Read the transcript
Most banks have a rigid rule: if your ABN hasn't been active for two full years, you can't get a home loan. But if your trade business has been booming for 12 months, why should your family wait to buy a house? We have direct access to alternative doc lenders who accept 6 to 12 months of active trading backed by clean business bank deposits. Stop waiting for arbitrary timelines. DM me 'GROWTH' to look at your options.
General information only, not personal advice. Your situation is assessed before any recommendation.
This topic is covered in full on Tailored Loans Sydney
Thinking of upgrading but keeping your Zetland unit as an investment? Here’s exactly how lenders assess the plan, how much rent they’ll count, and what numbers to check this week before you commit to a second property.
Read the full guide on tailoredloans.sydneyKeeping your old Zetland unit as an investment is possible, but lenders only support the plan if the numbers work after they shade your rent, tighten valuations and reclassify your first loan as investment debt.
In practice, banks will usually: 1) count only 70–80% of your Zetland rent, 2) load both loans with at least a 3% APRA buffer above the actual rate, and 3) apply stricter LVR caps and valuations to dense postcodes like Green Square and Zetland.
Step 1: How lenders treat your current Zetland unit
Your home loan becomes an investment loan
The minute you move out and keep the unit, most lenders will:
- Recode the loan as investment (often with a higher rate).
- Treat the repayments as an ongoing commitment when assessing the new home loan.
- Expect you to switch to P&I if you’re on interest‑only and your term is expiring.
If your current loan is $650,000 at 5.9% P&I over 30 years, real repayments are about $3,850 per month.
For servicing, most banks test this at ~8.9% (5.9% + 3% buffer), which is closer to $5,250 per month on their calculator.
Rental income gets “shaded”
Australian lenders typically shade rental income from investment properties to around 70–80% when testing borrowing power (claims 10 and 13).
Say you expect $850 per week rent on a one‑bed Zetland unit:
- Annual rent: $850 × 52 = $44,200.
- Bank uses 75%: $33,150 as assessable income.
That $11,000+ gap is the bank’s allowance for vacancy, costs and risk.
High‑density postcode rules
In Zetland/Green Square, many lenders add extra rules (claim 12 and [/insights/green-square-property-types-lending-rules]):
- Lower maximum LVR (e.g. 70–80% instead of 90–95%).
- More conservative valuations versus the price you think the unit is worth.
- Tighter policies for small units, mixed‑use buildings or lots of investor stock.
If your unit values at $750,000 but the lender is comfortable only to 80% LVR, your usable equity might be capped at around $50,000–$70,000 once they consider existing debt and buffers.
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Frequently asked questions
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