refinancing to invest in a property

Refinance Your Home Loan To Buy An Investment Property

Rates and fees last updated on

Refinancing your home loan can help you begin an investment journey

Many Australians refinance in order to purchase an investment property to benefit from rental return and potential capital gain which can help borrowers repay their mortgage or use money to invest further.

Home Loan Tip

To learn more about the benefits and risks of property investing, read our property investment guide.

While buying a property investment may be a good strategy, coming up with the funds for a deposit and associated holding costs can be difficult particularly if you already have a mortgage that you're paying off.

Refinancing is one way to help buy an investment property. It simply involves you refinancing your existing home loan and getting access to your equity to use as a deposit to purchase another property and diversify your portfolio.

Did you know?

Equity is the amount of your home you actually own. To determine the amount of equity that you have, take the property value and minus the amount that you owe on it to your lender.

Take a look at this example:

Brad wants access to his equity

Brad owns a home worth $500,000 and owes $200,000 left on it. This means he has $300,000 in equity and a Loan to Value Ratio (LVR) of 40%. After doing some research and speaking with his mortgage broker, Brad decides to buy an investment property. He refinances his existing mortgage with a new lender to get access the $200,000 of equity, which brings his LVR up to 80%.

Brad could've refinanced up to as much as a 90% LVR, giving him more to invest, but he decides not to as this would mean he'd have to pay a lender's mortgage insurance (LMI) premium.

With his $200,000, Brad buys an investment property and uses a combination of rental income and his salary to gradually pay it off.

If Brad built up more equity in both his home and investment property, you can see how Brad could carry this out again to purchase another investment property.

The risks of refinancing to invest in a property

Refinancing to borrow more and invest in an investment property can be a useful strategy for some borrowers, but make sure you evaluate the risks, such as:

  • Depreciation. If the property falls in value, it may be difficult to build up further equity and you may be in a worse financial position. To minimise the risk of your property depreciating in value, make sure you carefully research the property market to buy in a location that is likely to provide capital gain over time.
  • Market risk. If there is limited price growth in the area or there is not enough demand for property, then you may not receive a substantial rental income to cover your repayments. This is why it is essential that you conduct thorough research to ensure that there will be enough demand for your property type. Jump onto the council website to see what planned infrastructure developments are coming up and consider factors such as public amenities and days on market (DOM) to determine whether people are renting in the area.
  • Difficult tenants. As an investor, you run the risk of having difficult tenants who may refuse to pay rent, or who may vacate the property without giving you sufficient notice. As a result, you may face untenanted periods where you need to use your savings to cover the repayments until you can find a new tenant. You can lessen this risk by using a property manager to help you attract high-quality tenants.
  • Refinancing cost. Switching lenders and refinancing your mortgage can be an expensive process which is why you need to estimate the total refinancing costs involved. Sit down with an accountant and a mortgage broker to carefully consider the costs that you'll incur from exiting your current loan (e.g. discharge and government fees) as well as the costs of setting up a new home loan (e.g. application or establishment fees).

Use our calculator below to get an idea of your switching costs.

Next steps

The risks associated with buying a property and the fact that your home is being used to fund it mean you should get professional advice and do your own research.

Decide the type of property you'd like to invest in- residential or commercial, apartment or house- as well as the areas you'd like to buy in.

Access suburb reports from sources such as RP Data and speak to as many professionals as you can to ensure that refinancing to invest in property is a sound financial strategy for you.

Compare the below refinancing options for your next investment.

Rates last updated August 20th, 2017
% p.a.
Offset account
Split account
Loan type
Your filter criteria do not match any product
Interest Rate (p.a.) Comp Rate^ (p.a.) Rates (p.a) Application Fee Ongoing Fees Maximum Insured LVR Amount Saved Essentials - Variable (Investor, P&I) offer a low interest variable home loan with no application fee.
4.09% 4.11% Interest rate:

Comp rate:
$0 $0 p.a. 80% Go to site More info
Bank Australia Basic Home Loan - Investment Variable, P&I
An investment loan with $0 ongoing fees.
4.87% 4.91% Interest rate:

Comp rate:
$595 $0 p.a. 80% Go to site More info Essentials - Smart Loan Package P&I
Package your owner-occupied loan with your investment loan and enjoy low rates for both.
3.89% 3.91% Interest rate:

Comp rate:
$0 $0 p.a. 80% Go to site More info
Tic:Toc Invest Loan Variable Rate Home Loan
A low-fee variable rate investor loan with a fast online application process.
3.99% 4.00% Interest rate:

Comp rate:
$0 $0 p.a. 80% Go to site More info
NAB Choice Package Home Loan - 3 Year Fixed (Investor P&I)
Lock in the interest rate on your investment purchase for 3 years and enjoy the benefits of a package home loan.
4.24% 5.32% Interest rate:

Comp rate:
$0 $395 p.a. 95% Go to site More info
4.09% 4.09% Interest rate:

Comp rate:
$0 $0 p.a. 80% Go to site More info
NAB Base Variable Rate Home Loan - Investor (P&I)
A no frills home loan for an investor who doesn't want any bells and whistles.
4.65% 4.69% Interest rate:

Comp rate:
$600 $8 monthly ($96 p.a.) 90% Go to site More info
ING Fixed Rate Home Loan - 3 Year Fixed Rate (Investors)
Enjoy a competitive 3 years fixed rate with $0 ongoing fee.
4.39% 5.34% Interest rate:

Comp rate:
$499 $0 p.a. 95% Enquire now More info
St.George Fixed Rate Advantage Package - 3 Year Fixed (Investors, P&I)
Lock in your rate for 3 years on your investment property and know your monthly repayments. $1,500 cash back available for refinancers, conditions apply.
4.19% 5.37% Interest rate:

Comp rate:
$0 $395 p.a. 95% Enquire now More info
NAB Tailored Fixed Rate Home Loan - 2 Years Fixed (Investor P&I)
Lock in your investment fixed rate for two years.
3.98% 5.58% Interest rate:

Comp rate:
$600 $8 monthly ($96 p.a.) 95% Go to site More info
St.George Portfolio Home Loan With Advantage Package - $500k to $749k (Special Discount)
Pay no application fee when you package your equity loan with St.George's Advantage Package.
5.59% Interest rate:

Comp rate:
$0 $395 p.a. 90% Enquire now More info
Westpac Rocket Investment Loan - Principal and Interest
Use Westpac's variable home loan to purchase your next investment property.
5.79% 5.93% Interest rate:

Comp rate:
$600 $8 monthly ($96 p.a.) 95% Enquire now More info
NAB Tailored Fixed Rate Home Loan - 3 Years Fixed (Investor P&I)
A 3 year fixed rate for your next investment purchase.
4.34% 5.53% Interest rate:

Comp rate:
$600 $8 monthly ($96 p.a.) 95% Go to site More info

Marc Terrano

A passionate publisher who loves to tell a story. Learning and teaching personal finance is his main lot at Talk to him to find out more about home loans.

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2 Responses

  1. Default Gravatar
    TyronneFebruary 23, 2015

    I was wondering if you can transfer your equity from an investment property to your place of residence. E.g. I have a home valued at $265,000 and owe $130,000 then i have an investment rental property valued at $250,000 and a loan of $160,000

    can i refinance the rental so that i owe $200,000 and put the $40,000 onto my home loan so i only owe $90,000 on my house maximising the tax deductibility of my rental whilst minimising my current house loan?

    • Staff
      ShirleyFebruary 23, 2015Staff

      Hi Tyronne,

      Thanks for your question.

      Accessing your equity to put the funds into your main residence is definitely possible. If you find that none of these loans are suitable for your situation, there is always the option of speaking to a home loan broker. They’ll be able to help you further should need further help in narrowing down a suitable home loan option.

      Regarding tax deductibility, you will need to confirm this aspect with your trusted accountant.


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