How to Obtain Finance to Purchase Property

Understanding How to Secure Finance Before You Buy

When it comes to building a strong property portfolio, strategy and asset selection are important — but the real foundation lies in finance. Smart investors understand that access to lending and the ability to leverage it effectively is what accelerates long-term wealth creation.

Why Finance Matters

Leveraging borrowed funds allows investors to multiply returns. For instance, using $100,000 as a full cash purchase might generate a $10,000 gain if the property rises 10%. But if that same $100,000 is used as a 10% deposit to control a $1 million asset, a 10% rise equates to a $100,000 gain. The larger your portfolio, the more powerful this compounding effect becomes.

Understanding Borrowing Capacity

Your borrowing capacity (or serviceability) is your ability to meet loan repayments based on income, expenses, assets, and liabilities. A higher borrowing capacity means greater purchasing power. Maximising income and minimising unnecessary debt are two key ways to strengthen this metric.

Two Ways to Obtain Finance

1. Directly through a Bank
   You can apply directly with a lender such as Commonwealth Bank, ANZ, or Westpac. They’ll guide you through their internal approval process, usually via phone, email, or in person.
2. Through a Mortgage Broker (Recommended)
   A mortgage broker works on your behalf to source the most suitable loan from a range of lenders. Importantly, they are paid by the bank — not by you — meaning their service doesn’t cost you anything.

Brokers start by assessing your financial situation, often via a short fact-finding form, to estimate your purchasing power. If you’re comfortable with the projected budget, they proceed to organise a pre-approval (sometimes called conditional approval).

They’ll compare options across interest rates, loan types (variable, fixed, interest-only, principal & interest), and terms to find the right fit. The process can take anywhere from a few days to several weeks depending on the complexity of your application.

Pre-Approval Before Searching

Always secure a pre-approval before you start your property search. It provides clarity on your budget and avoids wasting time on properties outside your reach. While a pre-approval isn’t a guarantee, it’s a strong indication of borrowing capacity and usually valid for three to six months.

From Exchange to SettlementOnce you’ve exchanged contracts, your broker sends the signed documents to the lender, who conducts a bank valuation to confirm the property’s worth. If all checks align, they’ll issue unconditional approval before settlement. Your broker will coordinate with your solicitor to finalise everything — after which, you’re ready to move in or lease the property.