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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.19% p.a.
6.58% p.a.
$2,589
Principal & Interest
Variable
$0
$530
90%
Featured 90% LVR
  • You MUST already have Solar or a documented plan to install within 90 days to be eligible for this loan
  • Available for refinance or purchase
  • No monthly, annual or ongoing fees
6.29% p.a.
6.20% p.a.
$2,473
Principal & Interest
Variable
$0
$0
80%
6.19% p.a.
8.01% p.a.
$2,447
Principal & Interest
Fixed
$8
$810
90%
6.14% p.a.
7.70% p.a.
$2,047
Interest-only
Fixed
$0
$180
90%
6.29% p.a.
6.42% p.a.
$2,473
Principal & Interest
Variable
$10
$250
90%
6.59% p.a.
8.09% p.a.
$2,552
Principal & Interest
Fixed
$395
$0
90%
6.74% p.a.
7.77% p.a.
$2,592
Principal & Interest
Fixed
$0
$160
90%
6.60% p.a.
6.97% p.a.
$2,555
Principal & Interest
Variable
$395
$200
60%
6.34% p.a.
6.69% p.a.
$2,486
Principal & Interest
Variable
$395
$0
70%
More home loans
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of .

March Investment Home Loan Rates Top Picks

Many lenders increased the interest rates on offer to property investors following the cash rate hike implemented by the Reserve Bank in November last year. While borrowers have had a reprieve for the last few months, investment loan rates are still the highest they have been in years, so it's even more important than ever to keep shopping around to find the lowest rate available. Now could be the time to lock in a fixed rate or look to refinance to a more competitive deal.

These are some of the lowest rates on investment loans in our database for the month at the time of writing.

Best investment home loan rates from our database.

Brand

Product

Advertised rate % per annum

Comparison rate % per annum
Unloan Unloan Variable Rate Investment Loan - Refinance Only 6.29% 6.20%

Heritage Bank

Heritage Bank Fixed Rate Investment Loan (Principal and Interest) 5 years

6.19%

8.01%

Greater Bank

Great Rate Fixed Investment Loan (Interest Only) (NSW, ACT & QLD only) 3 Years

6.14%

7.70%

Bendigo Bank

Bendigo Bank Express Investment Loan (Principal and Interest)

6.29%

6.42%

Westpac

Westpac Premier Package Fixed Rate Investment Loan (Principal and Interest) 2 years (LVR>80%)

6.59%

8.09%

Rates correct as of 1 March. Rates may differ to comparison table above.

What exactly is a investment property loan?

Whether you’re purchasing your first investment property or your third, you’re going to need an investment home loan to get you there. Investment home loans are a type of loan that allows investors to purchase a property with the sole purpose of making money off it by renting it out.

Investment home loans function in pretty much exactly the same way as an owner occupier home loan does. The only difference is that unlike an owner occupier home loan, you can only apply for an investment home loan for your investment property.


4 ways to compare investment property home loans

Investing in property could be a good financial asset especially when it is planned out thoroughly from the beginning. Comparing loans is what buyers should do to find the lowest home loan investor rates available in the market.

To compare investment property loans, investor should look for the following:

1. Competitive interest rate

Just because investment home loan interest rates are generally higher than owner occupier rates, it doesn’t mean there aren’t good deals to be found. A lower interest rate means lower repayments, and if you’ve got an interest-only loan, that interest is tax-deductible which makes your loan even cheaper.

Do investment property loans have higher interest rates?

While investment property loans work just the same way as owner-occupier loans, they have higher interest rates because of its riskier nature.

Lending rules are also stricter for property investors, as they will need to provide proof that they earn enough income to cover the repayments not just of their investment loan but also their owner-occupier loan if they are still paying for their main residence.

2. Low fees

Mortgage fees on investment home loans are generally tax deductible, but you should still look out for an investment loan with low/no fees where possible.

3. Loan features

Investment home loans generally come with more features and benefits that are useful to investors. Savvy property investors should look for the following features when comparing investment loans:

  • Redraw facility
  • Offset account
  • Ability to make extra repayments
  • Ability to make interest-only repayments for a period of time
  • Repayment holiday
  • Choice of repayment frequency

4. Loan type

You need to consider whether you want a fixed or variable loan as well as the repayment type - principal-and-interest or interest-only?

There are two repayment types for investment mortgages: interest-only and principal-and-interest repayments.

Principal-and-interest

With this repayment type, you pay off the amount you’ve borrowed (the principal) and the interest together. Principal-and-interest (P&I) repayments allow you to reduce your debt more quickly because you’re paying off the amount you’ve borrowed as well as the interest. However, principal-and-interest repayments are not tax-deductible.

Interest-only

As the name suggests, you’re only paying off the interest portion of the loan with this repayment type, which means the overall repayments are smaller than a principal-and-interest loan.

Interest-only loans are popular investment properties because the interest is tax-deductible. Interest-only loans are generally available for between one and five years before the loan reverts back to principal-and-interest repayments.


How do investment home loans work?

Part of your investing strategy is choosing the right investment home loan that suits your needs. As with owner-occupier loans, there are different types of investment home loans in terms of rates, repayment, and deposit.

Typically, you will need to provide 20% of the property’s value as your mortgage down payment if you are taking out an investment loan.

Savvy investors who already have several years and properties under their belt explore different strategies to help them meet the deposit requirement. An option would be getting a guarantor loan, which uses equity in another person’s equity as security. This way, an investor can get funds of up to 100% or more of the property’s value.

Another option is to use their own equity in their own property to access 100% financing. They can either use their principal place of residence or other properties in their portfolio.

However, it is not always the case that you need to meet 20% of the property’s value as a deposit for an investment home loan — some lenders may allow investors to borrow up to 90% or even 95% of the property’s value with Lenders Mortgage Insurance (LMI).


Types of rates for investment home loans

When you take out an investment loan, you’ll choose between a fixed interest rate, variable interest rate, or a split loan. Here are the three most common types of rates you can choose from when you're buying an investment property.

Fixed home loans

A fixed home loan is where the interest rate is fixed (meaning it won’t change) for a set period of time, usually between one and five years, though some lenders may have longer fixed term periods of up to 10 years. Fixed loans can be favourable if you want to lock in your repayments at a specific interest rate, so you have repayment certainty for the first few years of owning the property.

Variable home loans

A variable home loan means the interest rate will move up or down over the loan term. Interest rate movements can happen at any time at the discretion of the lender, but most commonly occur in line with changes to the official cash rate set by the RBA.

Split home loans

A split rate is where a portion of the rate is fixed and the other portion is variable. This isn’t always a 50:50 split - it could be an 80:20 split or a 60:40 split - whatever is agreed upon by you and the lender.

For example, if you are borrowing $600,000 you may choose to fix $400,000 and keep the remaining $200,000 on a variable rate. Split loans allow you to hedge your bets by taking advantage of both types of interest rates. If interest rates fall, having more of your loan as variable means you get to reap the rewards of falling rates. Similarly, having a bigger portion of your loan fixed could benefit you in a rising interest rate environment.


Best features of an investment loan

Investing in property takes a well-crafted strategy. Aside from being aware of your financial health, you should be able to have the discipline to think of ways to grow your earnings over time.

Strategising often starts with choosing the best investment home loan to help you finance your target property. When hunting for the best deal, it is a must to look beyond the home-loan products' interest rates. Many home-loan offers may have lower interest rates but will not give enough flexibility for you to play your cards your own way.

Home-loan features help you in different ways — some help you manage your finances while others help you shave off time of your mortgage. The best features, however, are those that can significantly reduce the cost of the loan, eventually helping you save hundreds, even thousands, every year.

Here are some of the best features of an investment home loan and how they can help you:

1. Interest-only payments

An interest-only home loan enables borrowers to pay only the interest for a certain period of time, usually from five to 10 years. The principal amount of the loan stays intact for the loan term. Aside from paying lower monthly repayments, investors can also take advantage of tax claims by taking out an interest-only loan, particularly if they rent out their properties.

For instance, if you receive $25,000 in rent for a year and you pay cumulative interest repayments of $28,000 annually, this would mean that your property is negatively geared. You are then entitled to claim the difference between the amount of your interest repayments and your rental income.

This is helpful if you have any other personal debt you would like to focus on, given that such is not tax deductible. The extra amount you can save from interest-only payments can also be used for other investment ventures which can really support you in growing your portfolio.

2. Repayment holiday

Investors often depend on rental income to cover the bulk of their mortgage repayments. However, there are instances when properties are left unoccupied and therefore are unable to supply you with a steady stream of money to help you pay the monthly dues.

In cases like this, a repayment holiday is your best friend. If your home loan has this feature, you can take a break from making repayments for a certain period of time, which is usually up to a year. Typically, a lender will only allow you to temporarily stop your monthly payments if you have made extra or advance payments to create a buffer. You can arrange this with your lender and see what terms they have.

The only disadvantage of having this feature is that interest charges continue to accrue while you are on a repayment lull. This means that at the end of your loan term, you will have paid more than you originally owed.

3. Ability to choose repayment frequency

In order to properly manage your finances, you have to make sure that your payments are organized at your most convenient way.

On important feature that is often overlooked not just by investors, but by homebuyers in general, is the ability to choose the frequency of repayments. When you have an investment property, it is advised to sync your repayment schedule with how often you get rental payments from your tenants. If your tenants pay rent on a weekly basis, then your repayment for your home loan should be on a weekly term as well.

This will not do much in the short term, but it can add up and help you save on your home loan. For instance, setting your repayment schedule on a fortnightly basis allows you to make an extra month of repayment, given that there are 26 fortnights a year, which is equivalent to 13 months.

4. Offset account

An offset account is another popular home loan feature for investors, who often use it as a replacement to their everyday bank account. Essentially, an offset account works like a savings account in which you can stash your extra funds. It comes with a debit card that you can use to withdraw money and to pay for regular purchases.

An offset account is useful especially if you want to cut the interest charged to your loan. The balance on your offset account reduces the amount charged with interest: Say you have a $400,000 loan with a 5.25% mortgage rate and you have $80,000 on your offset account. In that case, the rate will only apply to $320,000.

Most investors hit two birds with one stone by using an offset account. They get to reduce the interest they pay, while at the same time save enough to fund another investment property purchase. There are partial offset accounts and full offset accounts, but the latter are only typically available to those with variable home loans.

5. Minimal home-loan fees

When investing you should be wary of every cost you have to pay. You want to save as much as you can to maximise what you earn from your investment portfolio. This is why it is a must for you to get home loans that have minimal fees. These home loans will allow you to pay your costs upfront, relieving you from having to worry about other costs over the period of your loan.

When looking for home loans, list all the costs associated with the product and negotiate with your lender. Ask them which ones can be paid upfront and which ones can be waived. As much as possible, you should also look for investment loans with no application fees. Lenders usually have this type of investment loan as part of a promotion or a packaged home loan. Ask your lender if these investment loans are available.

6. Line-of-credit facility

A home loan with a line-of-credit facility allows you to access a predetermined amount of credit. This means you can borrow extra money whenever you want without applying for another loan.

The amount you borrow is typically secured against the equity you have in your property. If you meet your lender's rules, you will be able to take out a loan against a certain proportion of the equity you have built in your home. The loan can be for anything: renovations, holidays, or even a car purchase. The good thing about this home loan feature is that you will only pay interest on the amount you have already used.

However, you have to take note of some trade-offs. First, due to the convenience of the line of credit facility feature, home loans with such features often have higher interest rates. You also have to be aware of the fees that come with it.


What are the eligibility requirements for an investment home loan?

Applying for an investor home loan is very similar to applying for any other kind of home loan; the lender will want to get a full picture of your financial situation which means going over your credit history, bank statements, income, expenses, assets and debts with a fine tooth comb.

Here are some important things to note when applying for a loan on investment properties:

  • You’ll need a bigger deposit. Low-deposit investor loans are tough to come by and you’ll often need to stump up a deposit of 20% or more of the property’s value. The deposit can be made up of savings or the equity you own in another property. Some lenders may allow investors to borrow up to 90% or even 95% of the property’s value with Lenders Mortgage Insurance (LMI) .
  • Higher interest rates. Investor home loans usually have higher interest rates than owner occupier loans because investment loans are seen as being a riskier loan.

Because lending rules are generally stricter for investment home loans, investors will need to prove that they will earn enough income from their employment to cover the cost of repayments. Other sources of income like rent from other investment properties can also be included, but many lenders will only partially include these forms of income as they’re typically less consistent and reliable than a wage or salary. It’s important to note that lenders generally won’t take into account the income you hope to receive on your property investment because you still need to be able to afford the loan if the property is untenanted for periods of time.

The first steps to Property Investment

New to property investment? Set clear financial goals, understand your budget, and choose straightforward loans with manageable rates. Seek guidance from beginner-friendly lenders, focus on properties in growth areas, and learn the basics of market trends. Practice patience and thorough research as you start your investment journey.

Helping you choose the right investment home loans

When selecting a loan for real estate investment, prioritise features tailored for investors, such as investor-friendly terms and beneficial perks. Ensure the loan options are easy to compare, allowing you to make a straightforward choice that aligns with your investment objectives.

Redraw facility & Offset Accounts

Repayments

    Strategies for Advanced Property Investors

    Advanced property investors, use existing property equity for new ventures and consider commercial loans. Diversify across property types and locations for risk management. Look for value-add opportunities, stay updated on market trends, and build a strong network. Use advanced analytics and tax-efficient strategies for a more robust portfolio.

    Frequently Asked Questions

    Investors can use the equity in their home as a deposit on their investment property. The current property then becomes a security on the new debt.

    Investment home loans generally have higher deposit requirements than owner occupier loans. Typically you’ll need a 20% deposit for an investment loan but some lenders may allow a smaller deposit with Lenders Mortgage Insurance (LMI).

    Capital gains tax exemptions are only available to sold properties that served as a principal place of residence. Since investment properties are used to generate income, it will not qualify for any exemptions.

    However, there is a special rule that exempts a rental property if it is sold within six years from being converted from a principal place of residence. Take note, however, that this will only hold if you do not own another main residence during the time that the property is rented out.

    While you generally can’t avoid capital gains tax when selling your investment property, you can definitely employ strategies to minimise it.

    The best way to minimise your CGT is to keep accurate records so you can claim for more in your cost base. Any capital costs you incur would be added to your cost base, which will substantially lessen the capital gains taxable.

    Furthermore, you must maintain ownership of the investment property for at least one year to automatically get a 50% discount.

    Owning an investment property entitles you to a range of tax deductions that can boost your working capital. According to the Australian Taxation Office (ATO), landlords can only claim deductions on their rental properties during periods when it was tenanted or genuinely available for rent.

    Some of the deductions you can claim are property taxes and insurance, mortgage interest, management fees, council rates, and repair costs. This checklist of expenses will show you which ones you can claim when you file your annual taxes.

    Yes, investing in property can be financially rewarding as it can be seen as a viable way to build wealth. However, it has its own pros and cons.

    One of the biggest upsides of an investment property is having a steady flow of passive income in the form of rent. In many cases, an investment property pays for itself, as rental income can be used to settle mortgage payments and other expenses.

    Property investors can also take advantage of tax benefits, allowing them to maximise their returns.

    Overall, investing in property is a long-term investment strategy — as time goes, you would be able to improve your cash flow and build enough funds to expand your portfolio.

    However, the biggest drawback of investing in property is its high entry cost — a mortgage deposit can cause thousands of dollars.

    Furthermore, property is not as liquid as other asset classes like stocks — it will take a longer time to sell it if you need quick access to cash.

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