Refinance Your Home Loan To Buy An Investment Property

Coins and housesStart your path to investment wealth by refinancing your mortgage to fund your investment property.

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.

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.

Learn more about investing in property

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.

Take a look at this example:

Brad wants access to his equity

Handsome but balding man.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).

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 refinancing options for your next investment in the table below

Rates last updated August 21st, 2018
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.89%
4.24%
$0
$0 p.a.
80%
Sharp interest only package rate
Fix your rate and minimise repayments for 2 years with this interest-only investor mortgage.
3.99%
3.99%
$0
$0 p.a.
80%
Special discounted interest rate
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.
3.98%
3.98%
$0
$0 p.a.
70%
Requires a 30% deposit
Investors can get a 100% offset account and a low rate if they have a big deposit. 100% online application process.
3.91%
3.92%
$0
$0 p.a.
80%
Add an offset account for $10 a month
Investors can go from application to approval in as little as 20 minutes with this innovative online lender.
3.97%
3.99%
$0
$0 p.a.
80%
Competitive investment package loan
Package your owner occupied loan with investment loan and receive a discounted investment rate. 100% offset account included.
4.09%
4.87%
$0
$395 p.a.
90%
10% deposit option available
Buy your investment property and set your repayments for the first year. Available in QLD, NSW and ACT only.
3.93%
3.94%
$0
$0 p.a.
80%
Competitive investor rate with plenty of features
This investment loan keeps fees low, has a sharp interest rate and comes with a 100% offset account.
3.99%
4.14%
$0
$0 p.a.
70%
Competitive investor mortgage for borrowers with a 30% deposit.
4.29%
4.31%
$0
$0 p.a.
80%
Flexible, low fee mortgage
Investors will pay no application or ongoing fees for this interest-only loan.
4.18%
4.18%
$0
$0 p.a.
80%
Competitive investment mortgage
Investors get a 100% offset account and pay no application or ongoing fees on this loan from an innovative online lender.
3.99%
3.99%
$0
$0 p.a.
70%
Save on fees with this investor mortgage
Investors with a 30% deposit can get this low rate loan to fund their property portfolio.
4.29%
4.31%
$0
$0 p.a.
80%
Simple, flexible investment product
A simple, variable rate investor loan from an online lender that keeps fees to a minimum.
3.99%
4.62%
$395
$0 p.a.
80%
Flexible fixed investment loan
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.
4.24%
4.68%
$0
$0 p.a.
90%
Investor loan with a small deposit option
Fix your investment repayments for 1 year. You can get this loan with a 10% deposit. Available in QLD, NSW and ACT only.
4.13%
4.14%
$0
$0 p.a.
90%
Available with a 10% deposit
Access a fee-free offset account and a special interest rate for investors.
4.14%
3.96%
$0
$0 p.a.
80%
Low fee investor mortgage
Investors can go from application to full approval in as little as 20 minutes with this innovative online lender.
4.18%
4.19%
$0
$0 p.a.
80%
Line of credit for investors
Investors can easily access their equity using BPAY, a debit Master Card or cheque book with this interest-only line of credit.
4.31%
3.95%
$0
$0 p.a.
80%
Rapid online application process
A variable interest-only loan for investors. Fast application, low fees, optional offset account. 100% online lender.
4.14%
4.17%
$0
$0 p.a.
80%
Competitive rate for investors
Investors can enjoy flexible repayment options and pay no application or ongoing fees.
3.94%
3.92%
$0
$0 p.a.
80%
Add an offset account for $10 a month
Lock in your interest rate for 2 years and enjoy flexibility, an optional offset account and a fast online application process.
4.29%
4.27%
$0
$198 p.a.
70%
Lock in your investment rate for 3 years
Fund your property portfolio with this fixed rate mortgage which includes a 100% offset account. 30% deposit required.
3.84%
3.91%
$0
$0 p.a.
80%
Flexible low fee mortgage
Enjoy a fast application process and flexible repayment options with this fixed rate mortgage for investing.

Compare up to 4 providers

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Marc Terrano

Marc Terrano is a content marketer manager at finder. He's been writing and publishing personal finance content for over five years and loves to help Australians get a better deal.

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Important Information*
UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000

Take advantage of a low-fee mortgage with a special interest rate of just 3.59% p.a. and a 3.59% p.a. comparison rate.

loans.com.au Essentials - Variable (Owner Occupier, P&I)

A competitive interest rate home loan with interest only options. Interest rate 3.64% p.a.
comp rate of 3.66% p.a.

Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤90% ($150K+ Owner Occupier)

Loans over $150k get a discount off an already low fixed rate. Available for NSW, QLD and ACT residents only.

Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150k+ Owner Occupier, P&I) Discount 1

New borrowers or refinancers can get a discounted rate with this package loan. Bonus $1,500 cashback for refinancers.

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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?

    • finder Customer Care
      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.

      Cheers,
      Shirley

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