---
title: First Investment Property in Melbourne's North | GNT Finance
description: How to fund a first investment property in Epping, Wollert or Craigieburn with home equity, what land tax and gearing do to cashflow, and a $650,000 example.
url: https://gntfinance.com.au/blog/buying-your-first-investment-property-in-melbourne-north/
author: Gorakh Timilsina
published: 2026-09-09
category: Investing
---

# Buying your first investment property in Melbourne's north

**In short:** Most first-time investors in Melbourne's north fund the purchase by releasing equity from their own home rather than saving a second deposit. A home worth $800,000 with a $450,000 loan has about $190,000 of usable equity at 80% LVR, enough for a 20% deposit and costs on a $650,000 house in Epping, Wollert or Craigieburn. Budget for land tax and a cashflow shortfall, and hold for the long term.

If you have owned your home in the north for a few years, you may have more equity than you realise, and that equity is the usual launch pad for a first investment property. This post explains how the equity release works, what a purchase in the growth corridor looks like on paper, and the ongoing costs that catch new investors out. It is finance-focused; we are not property advisers, and where to buy is your call.

## Key takeaways

- Usable equity is 80% of your home's value minus your current loan; above 80% you pay LMI on the release.
- Keep the investment loan separate from your home loan so interest is clearly deductible.
- Houses in the growth corridor generally offer more land and lower rental yield than units; expect to top up the cashflow.
- Victorian land tax applies to investment property every year, with a tax-free threshold of $50,000 in site value and a principal residence exemption for your own home.
- Lenders assess the new loan and your existing loan together at the rate plus 3% buffer, and usually shade rental income.

## Step 1: work out your usable equity

Take a [Roxburgh Park](/mortgage-broker/roxburgh-park/) couple whose home is now worth $800,000 with $450,000 owing.

| Item | Amount |
|---|---|
| Home value (lender valuation) | $800,000 |
| 80% of value | $640,000 |
| Less current loan | $450,000 |
| Usable equity without LMI | $190,000 |

Lenders will sometimes go to 90% with LMI, which would release another $80,000, but for a first investment the 80% line is the sensible limit. Use the [equity calculator](/calculators/equity/) with a realistic value; the bank valuation, not the agent's appraisal, is what counts. The full method is in [how to use equity to buy an investment property](/guides/how-to-use-equity-to-buy-investment-property/).

## Step 2: structure the loans

The cleanest structure is two separate facilities:

1. An **equity release loan** against your home for the deposit and costs on the investment. Keep it separate from your owner-occupied loan so the deductible interest is clearly identifiable.
2. An **investment loan** against the new property for the balance, typically 80% of its price.

Do not simply increase your home loan and mix the money. Once deductible and non-deductible borrowing are blended in one account, untangling them for the ATO is painful. Interest-only on the investment loans is common because it maximises deductible interest and cashflow, though it costs more over the life of the loan; see [interest-only loans explained](/guides/interest-only-loans-explained/) and compare with the [interest-only vs P&I calculator](/calculators/interest-only-vs-principal-and-interest/).

## Step 3: a worked purchase at $650,000 in Wollert

| Item | Amount |
|---|---|
| Purchase price | $650,000 |
| Stamp duty (investor, general rate) | $34,070 |
| Conveyancing, inspections, lender fees | about $3,500 |
| 20% deposit | $130,000 |
| Total funded from equity release | $167,570 |
| Investment loan (80%) | $520,000 |
| Total new borrowing | $687,570 |

For illustration, at 6.00% p.a. interest-only, the new borrowing costs about $41,250 a year in interest. If the property rented for $550 a week (an assumption for the example, not a market figure), gross rent is $28,600 a year. Add property management, council rates, water, insurance, maintenance and land tax, and the annual shortfall before tax is likely in the range of $18,000 to $20,000. The [investment property cashflow calculator](/calculators/investment-property-cashflow/) lets you enter your own rent and expenses.

That shortfall is what negative gearing is: the loss reduces your taxable income. For a borrower in the 30% bracket (income $45,001 to $135,000 in 2026–27), a $19,000 loss returns roughly $6,080 including the Medicare levy, so the real cost of holding is closer to $13,000 a year. Whether that is worth it depends on capital growth you cannot know in advance, which is the honest core of the [negative gearing debate](/guides/negative-gearing-explained/).

## Land tax: the cost most first investors forget

Your own home is exempt from Victorian land tax. An investment property is not. Land tax is charged on the site value of the land (not the property price) across all your taxable Victorian landholdings at 31 December each year. The 2024 to 2033 general rates start at nil under $50,000, $500 from $50,000, $975 from $100,000, and $1,350 plus 0.3% of the excess from $300,000 to under $600,000.

For a growth-corridor house with a site value of $380,000, the bill is $1,350 plus 0.3% of $80,000, which is $1,590 a year. Buy a second investment and the site values are added together, so the rate climbs. Foreign owners who do not live in Australia also pay an absentee owner surcharge of 4%. Check your figure with the [land tax calculator](/calculators/land-tax-victoria/), read [land tax in Victoria explained](/legal/land-tax-victoria-explained/), and confirm the current rates with the [State Revenue Office](https://www.sro.vic.gov.au/land-tax). Note also that the [vacant residential land tax](/legal/vacant-residential-land-tax-victoria/) applies state-wide if the property is empty for more than six months in a year.

## Where in the north, and why yields differ

We are not property advisers, but we do see what investors buy. [Epping](/mortgage-broker/epping/) has an established rental market, hospital and university employment and train access. [Wollert](/mortgage-broker/wollert/) and [Craigieburn](/mortgage-broker/craigieburn/) offer newer housing stock, which tends to mean lower maintenance and higher depreciation deductions in the early years. As a general pattern, houses on larger blocks carry lower rental yields than townhouses or units but more land content, which investors buying for growth often prefer. Talk to local property managers about actual rents and vacancy before you rely on any figure.

## How the lender assesses you

The lender adds the new loans to your existing home loan and tests the lot at the rate plus 3 percentage points. Rental income is typically counted at 80% or less to allow for vacancy and costs. Land tax, rates and insurance are added to expenses. In practice this means an investor with a comfortable home loan can find the second purchase pushes servicing to the limit. Our [investment property loans](/services/investment-property-loans/) page covers policy differences, and the [investment property guide](/guides/investment-property-guide/) walks through the whole process.

If you do not own a home yet, you can still invest first and rent where you want to live; [rentvesting](/guides/rentvesting/) explains the trade-offs, including losing the first home buyer stamp duty exemption on the investment purchase.

## Selling later: capital gains tax

When you sell, the profit is taxed as a capital gain. Hold for more than 12 months and the 50% CGT discount applies, so half the gain is added to your income in the year of sale. The [ATO's CGT guidance](https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax) is the authoritative source and our [CGT calculator](/calculators/capital-gains-tax/) gives a first estimate. Plan the sale year with your accountant; timing the contract date across a financial year boundary can change the tax outcome.

## Frequently asked questions

### Can I use the First Home Guarantee to buy an investment property?

No. The Guarantee, the First Home Owner Grant and the first home buyer stamp duty exemption all require you to live in the property. If you use a home-buying concession and later move out and rent the property, you must have met the residence requirement first, and the lender must be told the loan purpose has changed.

### Should I cross-collateralise my home and the investment?

Usually not. Cross-collateralisation ties both properties to both loans, which limits your ability to sell or refinance one without the lender re-assessing everything. Two separate loans with the equity release secured on your home and the investment loan on the investment property gives you the same result with more control.

### Is the interest on the equity release loan deductible?

Generally yes, if the borrowed money is used to buy the income-producing property and the loan is kept separate from private borrowing. It is the purpose of the borrowing that matters, not which property secures it. Confirm the treatment with your accountant, especially if you later redraw funds for private use.

### How much cash buffer should I keep?

Enough to cover several months of the shortfall plus a vacancy or a major repair. A hot water system or a tenant leaving in December can arrive together. Keeping a buffer in an offset against the investment loan reduces interest while keeping the money accessible.

## Talk to GNT Finance

We structure equity releases and investment loans for northern-suburbs homeowners every month, and we will show you the cashflow honestly before you commit. [Book a free consultation](/contact/) or call Gorakh Timilsina on 0426 403 703. There is no cost to you for our home-loan service in most cases.

*This page is general information only and not legal, tax or financial advice. Laws change — confirm current rules with the State Revenue Office, the ATO or a licensed professional.*