Is it difficult to get an investment home loan in Australia?
Obtaining an investment home loan in Australia can be more challenging compared to securing a loan for a primary residence due to several factors. While it's not impossible, borrowers may encounter stricter eligibility criteria and higher deposit requirements.
Lenders typically require a higher deposit for investment home loans compared to owner-occupied loans. While owner-occupiers may be able to secure a loan with a deposit as low as 5% to 10%, investment property borrowers often need a deposit of at least 20% to 30% of the property's purchase price.
Banks may apply stricter lending criteria for investment home loans, considering factors such as the borrower's income, credit history, employment status, and existing debts. They may also scrutinize the potential rental income from the investment property and the borrower's ability to service the loan. So, lenders may only consider a portion of the rental income from the investment property when assessing the borrower's borrowing capacity.
Interest rates for investment home loans may be slightly higher compared to owner-occupied loans, reflecting the higher risk associated with investment properties. Additionally, borrowers may encounter higher fees and charges, such as application fees, valuation fees, and ongoing fees.
What are the best investment home loan rates?
They can vary depending on several factors, including the lender, the type of loan, the loan term, the loan-to-value ratio (LVR), and the borrower's financial profile. Additionally, interest rates can fluctuate over time in response to changes in market conditions and economic factors.
We have collected offers with the most favourable mortgage rates in the table above. Simply follow the links and select the loan that best suits your needs.
Home loan calculations for 20 years (example)
| Amount, $ | Rate, % | Accrued %, $ |
| 100,000 | 5.20% | 52,433 |
| 100,000 | 5.30% | 53,442 |
| 100,000 | 5.40% | 54,450 |
| 150,000 | 5.50% | 83,188 |
| 150,000 | 5.60% | 84,700 |
| 150,000 | 5.70% | 86,213 |
| 200,000 | 5.80% | 116,967 |
| 200,000 | 5.90% | 118,983 |
| 200,000 | 6.00% | 121,000 |
| 250,000 | 6.10% | 153,771 |
| 250,000 | 6.20% | 156,292 |
| 250,000 | 6.30% | 158,813 |
Can I refinance an investment home loan?
Yes, if market interest rates have decreased since you initially took out your loan, refinancing a loan with a lower interest rate can potentially save you money on interest payments over the life of the loan.
If you have multiple loans or debts, such as credit card debt or personal loans, you can refinance your investment home loan to consolidate these debts into a single loan with a lower interest rate.
You may want to refinance to switch from a variable-rate loan to a fixed-rate loan, or vice versa, depending on your preference for interest rate stability or flexibility.
Can I get interest only loan on investment property?
Yes, you can get an interest-only loan for an investment property in Australia. Such a loan allows you to only pay the interest portion of the loan each month for a specified period, typically between 1 to 5 years. During this period, you do not repay the principal amount borrowed.
Repayment Period: After the interest-only period ends, the loan typically reverts to principal and interest repayments, where you start repaying both the principal and interest portions of the loan.
Investors often use interest-only loans to maximize cash flow by keeping monthly repayments lower, which can be beneficial for managing investment property expenses and potentially increasing tax deductions.
