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Investment home loan rates

Investing in property? Cut back on your costs with a lower investment loan rate or unlock tax benefits with an interest-only mortgage.

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Name Interest Rate p.a. Comparison Rate p.a. Fees Monthly Payment
Principal & Interest20% min. depositInvestmentRefinance
Interest Rate
6.04%
Comparison Rate
5.95%
Fees
Application: $0
Ongoing: $0 p.a.
Monthly Payment
$3,315
Go to siteMore Info
Principal & Interest20% min. depositInvestment
Interest Rate
6.44%
Comparison Rate
6.46%
Fees
Application: $0
Ongoing: $0 p.a.
Monthly Payment
$3,458
Go to siteMore Info
Interest only30% min. depositInvestment
Interest Rate
7.14%
Comparison Rate
7.46%
Fees
Application: $0
Ongoing: $0 per month
Monthly Payment
$3,714
Enquire now
Principal & Interest40% min. depositInvestment
Interest Rate
6.34%
Comparison Rate
6.36%
Fees
Application: $0
Ongoing: $0 p.a.
Monthly Payment
$3,422
Go to siteMore Info
Interest only30% min. depositInvestment
Interest Rate
6.54%
Comparison Rate
6.55%
Fees
Application: $0
Ongoing: $0 p.a.
Monthly Payment
$3,494
Enquire now
Principal & Interest20% min. depositInvestment
Interest Rate
7.49%
Comparison Rate
7.50%
Fees
Application: $0
Ongoing: $0 p.a.
Monthly Payment
$3,845
Go to siteMore Info
Interest only20% min. depositInvestment
Interest Rate
7.24%
Comparison Rate
7.56%
Fees
Application: $0
Ongoing: $0 p.a.
Monthly Payment
$3,752
Enquire now
Principal & Interest20% min. depositInvestmentOffset account
Interest Rate
6.44%
Comparison Rate
6.69%
Fees
Application: $0
Ongoing: $248 p.a.
Monthly Payment
$3,458
Go to siteMore Info
Principal & Interest10% min. depositInvestmentOffset account
Interest Rate
6.19%
Comparison Rate
6.58%
Fees
Application: $0
Ongoing: $0 p.a.
Monthly Payment
$3,369
Go to siteMore Info
Principal & Interest20% min. depositInvestmentOffset account
Interest Rate
6.24%
Comparison Rate
6.28%
Fees
Application: $595
Ongoing: $0 p.a.
Monthly Payment
$3,387
Go to siteMore Info
$2,000 refinance cashback offer
Eligible refinancers who apply online and borrow $250K+ (LVR 80% or lower) can get a $2,000 cashback. Terms and conditions apply.
Principal & Interest40% min. depositInvestmentOffset account
Interest Rate
6.34%
Comparison Rate
6.59%
Fees
Application: $0
Ongoing: $248 p.a.
Monthly Payment
$3,422
Go to siteMore Info
Interest only 2Y Fixed10% min. depositInvestment
Interest Rate
6.79%
Comparison Rate
7.78%
Fees
Application: $0
Ongoing: $10 per month
Monthly Payment
$3,585
Enquire now
Principal & Interest 3Y Fixed10% min. depositInvestment
Interest Rate
6.64%
Comparison Rate
8.41%
Fees
Application: $0
Ongoing: $395 p.a.
Monthly Payment
$3,531
Enquire now
Principal & Interest30% min. depositInvestmentOffset account
Interest Rate
6.34%
Comparison Rate
6.59%
Fees
Application: $0
Ongoing: $248 p.a.
Monthly Payment
$3,422
Go to siteMore Info
Interest onlyInvestment
Interest Rate
6.89%
Comparison Rate
6.90%
Fees
Application: $0
Ongoing: $0 p.a.
Monthly Payment
$3,622
Enquire now
$2,000 refinance cashback
Refinancers borrowing $200,000 or more can get a $2,000 cashback (Other terms, conditions and exclusions apply).
Interest only 3Y Fixed20% min. depositInvestmentOffset account
Interest Rate
6.84%
Comparison Rate
6.83%
Fees
Application: $498
Ongoing: $0 p.a.
Monthly Payment
$3,604
Enquire now
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Showing 16 of 40 results

Your interest rate update: November 2023

On 07 November the official cash rate increased to:

4.35%

The lowest investor loan in Finder's database is:

6.04%

With this rate, assuming the average investor home loan size of $567,194 you would be making monthly repayments of:

$3,416

The lowest investment loan rate is Unloan's variable home loan

Rate rise a blow for homeowners

After 12 rate rises across 13 RBA rate decisions, Australian borrowers were used to seeing their mortgage repayments rise. But after a 4 month reprieve and only 7 weeks before Christmas, this month’s rate rise seemed to hurt more than most.

The RBA has retaliated against inflation, which is not slowing as fast as they would like. However, 30% of households are already in mortgage stress and another 25 basis points on top of their mortgage is going to put borrowers in a worse situation.

Despite the lowest investor rate on Finder being 6.04%*, RBA figures show the average variable investor loan interest rate is at an average of 6.49%.

On the average outstanding home loan amount in Australia, if you switched from that higher rate to Finder’s lowest rate, you could save $203 each month.

*rates correct as of 13 November 2023.

Graham Cooke

Graham Cooke heads up Finder's insights team, which is responsible for conducting data-driven research. He also regularly appears on TV and radio, taking part in more than 500 interviews to discuss financial news and trends.

What are investment home loans?

An investment loan is a mortgage investors use to buy investment properties. Investment loans have higher interest rates than owner-occupier loans because lenders view investors as riskier borrowers.

Investment loans: Basic facts

Rate

Fixed or variable rates

Investors can choose fixed or variable repayments. Variable rate loans are easier to pay off faster or refinance without an exit fee and are currently lower than fixed rate loans.

But a fixed rate loan lets you lock in an interest rate and forget about rates rising. There's also the option of splitting your loan into fixed and variable portions.

Thinking

Interest-only repayments

Most borrowers choose principal-and-interest repayments. You borrow money and pay it back, plus interest. Investors can do this too. But they have another option.

Interest-only investment loans start with very low repayments because you're just paying the interest charges. These loans cost you more in the long run. But they let investors maximise their tax-deductible debts in the short term.

House

Tax deductions

As an investor, most expenses related to owning and maintaining your investment property are tax-deductible.

This includes your loan fees and your loan interest charges. If your investment costs you more than it generates in rent, you can offset the cost by reducing your tax bill.

Common wisdom is to opt for an interest-only investment loan so you maximise your tax deductions. And it's a sound approach. The only exception is if you have already paid off the mortgage on your own home. This is not tax-deductible. At that stage, consider going principal and interest and throwing all the money you can at that investment loan to create a debt-free source of income in retirement.

Nicole Pedersen-McKinnon

Nicole Pedersen-McKinnon
Freelance finance journalist

How do I compare investment loans?

Property investors should consider the following when finding the ideal mortgage:

  • Interest rate. A lower interest rate means lower repayments, which makes your investment property less expensive.
  • Fees. Avoiding fees where possible can also help make your loan cheaper.
  • Loan features. Mortgage features like an offset account can help you build up savings while reducing your interest charges. Offset accounts can be very helpful for investors planning to convert their home into an investment later.
  • LVR. Loan to value ratio (LVR) is the amount you can borrow relative to the value of your investment property. The smaller your deposit, the more you have to borrow, and the higher your costs will be.
  • Borrowing capacity. Every lender has different lending criteria. It's worth looking at multiple lenders to get an estimate of your borrowing power before deciding on a particular loan or lender.

Investment strategies and tips

Investing in property allows Australians to build investment wealth in 2 ways:

  1. Rental income each month.
  2. Capital gains as the property's value grows over time.

Many investors ideally want to purchase properties that offer a consistent rental income and a high capital growth over time.

But investors in Australia have a big tax advantage: negative gearing. Even if your investment costs outweigh the rental returns in a financial year, you can use the loss to shrink your tax bill.

"Property investment is a game of finance with some houses thrown in the middle," says Metropole Property Strategists founder and CEO Michael Yardney.

"Beginning investors think they can just go to any bank, get the lowest loan rate and they will be set. But strategic investors don't use finance to buy properties, they set up their finance to buy the time to ride the ups and downs of the property cycle so their investment properties can increase in value, giving them the equity and cash flow to buy further properties.

How do I apply for an investment property loan?

Lenders treat investment properties as higher-risk purchases, which means it can be more complicated to get an investment loan approved.

6 tips to make your investment loan application a success

  1. Save a bigger deposit. A 20% deposit is a big ask, but it makes you a less risky borrower (and lets you save on LMI).
  2. Check your credit score. A quick check of your credit score is always good idea. Sometimes there are red flags or errors you might not have noticed.
  3. Trim your spending. Cutting back on unnecessary purchases in the 3 months leading up to your application boosts your chances of approval.
  4. Compare loans and lenders. Every lender has different eligibility criteria. Some may be stricter when lending to investors.
  5. Choose your property carefully. If the property you're buying looks like a riskier investment due to its size, property type or location, the lender might reject your application.
  6. Talk to a mortgage broker. A qualified broker can help match you up with a bank or lender whose policies and criteria best suit your personal situation.

Why the quality of your investment property matters

Lenders use your property as security. If you can't repay the loan then your lender has to sell the property to recover its debt.

"Assuming a lender will accept every property is a mistake," buyer's advocate and property investment adviser Cate Bakos tells Finder. "I've seen investors purchase properties with limited kitchen facilities in place only to be shocked when the property is rejected altogether by the lender.

If a lender already has too many borrowers investing in similar property types to yours in the same postcode it may reject your application. This reduces the lender's exposure to risk.

Risks and benefits of investing in property

Property investment can be both risky and rewarding. Here are some of the potential risks and benefits you should think about.

Benefits

  • Rental income. You can earn rental income that puts cash in your pocket right away.
  • Capital gain. If you hold the property for a long time, it could grow in value significantly.
  • Tax and depreciation benefits. You can deduct investment loan interest charges and other investment costs from your income tax each month, making the cost of owning a property far more affordable.
  • The potential to add value. Unlike shares or other investments, you may be able to increase your investment's value through renovations.

Risks

  • Purchase costs. There are also many upfront costs for investors, including lenders mortgage insurance (LMI), stamp duty, building and pest inspections, conveyancing and legal charges.
  • Ongoing costs. There are many ongoing costs such as repairs, strata fees and council rates.
  • Managing tenants. Being a landlord means dealing with the tenants in the property.
  • Illiquid asset. It can take months to sell an investment property if you need to generate cash.

Frequently asked questions

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  1. Finder's database, accessed 2 August 2023
  2. ABS lending indicators, accessed 2 August 2023

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