25/05/2026
Long read. Take 2 minutes. Worth it.
You've heard us talk about for years.
Sensitised P&I Amortised Remaining Term Assessment .
Sensitised means lenders add 3% buffers to your interest rate when they assess your borrowing capacity . So if you borrow at 6% they assess your capacity to repay at 9%
P&I Remaining Term Assessment means lenders remove any IO term from from your loan term when they assess your borrowing capacity . So someone taking a 30 year loan where the first 5 years is Interest Only has their capacity assessed over the 25 remaining years of the loan term instead of 30 years. So if you borrow at 6% and take 5 years of IO they assess your capacity to repay at 9% P&I over 25 years.
What this means is that cash flow and debt reduction are really helpful as you build an INV portfolio, because they help balance things out on serviceability calcs in a way that a property with vanilla yields cannot.
Vanilla yields have been completely acceptable to investors until now though, because the tax man helped carry the load. But that's not going to be the case for future purchases unless you buy new. So this changes lending yet again, and quite dramatically . This week lenders have started omitting neg gearing from servicing calcs when the property being purchased is not new. Let's call this new regime
Sensitised P&I Amortised Remaining Term Assessment Negative Gearing Omitted
It may sound like a dance, but it's really very serious. The changes mean that if you choose to invest in an established dwelling instead of a new dwelling, your borrowing capacity - already under significant downward pressure from SPARTA - will fall by a further 20-30%. So you'll have less borrowing capacity and no help from the tax man . That means substantial additional holding costs . St rates of 6% and with most rental yields below 4% , it's akin to bleeding 25-30K per year , per property . And if it isn't new you won't get a cent of it back at tax time.
We have spoken on these pages for years about how important cash flow and debt reduction is to a resi portfolio and how important it was to recalibrate portfolio's to add additional rental yield, so that you could ride out what we considered to be certain rate rises and certain borrowing capacity ceilings .
We have spoken about how Dual Occ's can take much of this discomfort and risk away and position you to be CF neutral or very close to it.
The lending rules were already making this important . The new rules for NG make this approach more important than it has ever been .
We have an excellent solution . Dual Occ. New Build. Keep your portfolio growing with the help of two rental incomes and the help of the tax man . If there was ever a no brainer this is it
