Compare investment property home loans for February 2024

Whether you’re looking to add to your property portfolio or are investing for the first time, Mozo helps you to compare investment loan options from a range of banks and online lenders below.

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Investment home loan comparisons on Mozo - last updated 22 February 2024

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  • Straight Up

    Obliterate, Investor, Principal & Interest, <50% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    6.34% p.a. variable
    6.34% p.a.

    Investors get a low variable rate depending on your deposit with Athena’s Straight Up Investor Variable Home Loan. AcceleRATES feature helps you to reduce your home loan even faster (T&Cs apply). Zero fees to pay. Free redraw facility. Handy mobile app to manage your home loan.

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    Details
  • Star Blue - SMSF Refinance Special

    Principal and Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    6.99% p.a. variable
    7.05% p.a.

    Grow your property portfolio with Homestar’s SMSF Home Loan. Offset account included. No liquidity or net asset position requirements. No ongoing fees. Minimum set-up costs. Fast application process with a dedicated home loan specialist.

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    Details
  • Back to Basics Special

    LVR<60%, Investment, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    6.43% p.a. variable
    6.44% p.a.

    Competitive variable for investors with no monthly account keeping or ongoing annual fees. Unlimited additional repayments & option to redraw additional repayments as cashback.

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    Details
  • Fixed Home loan

    50%-60% LVR, Investment, Interest Only

    interest rate
    comparison rate
    Initial monthly repayment
    6.54% p.a.
    fixed 3 years
    6.24% p.a.

    Competitive rate tiers for investors only. Leverage the equity you have built up for a lower interest rate. Enjoy a super-fast application process. Split up to 10 loans against your property. Optional offset accounts. Unlimited fee-free transactions. Interest only option.

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    Details
  • SMSF Home Loan

    LVR <70%

    interest rate
    comparison rate
    Initial monthly repayment
    6.99% p.a. variable
    7.00% p.a.

    Enjoy a competitive rate on your SMSF home loan with Loans.com.au. Available for refinancers only. No application fee and no settlement fee. No monthly, annual or ongoing fees. Unlimited extra repayments. Online access via Smart Money App. 30% deposit required.

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  • Fixed Home loan

    70-80% LVR, Investment, Principal and Interest

    interest rate
    comparison rate
    Initial monthly repayment
    6.64% p.a.
    fixed 3 years
    6.32% p.a.

    Competitive rate tiers for investors only. Leverage the equity you have built up for a lower interest rate. Enjoy a super-fast application process. Split up to 10 loans against your property. Optional offset accounts. Unlimited fee-free transactions. Interest only option.

    Compare
    Details
  • Mozo Expert Choice Badge
    Variable Investor Home Loan 80

    Investor, Principal and Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.34% p.a. variable
    6.36% p.a.

    Affordable home loan rate for buyers or refinancers.. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 30% deposit required.

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    Details
  • Fixed Home loan

    <50% LVR, Investment, Interest Only

    interest rate
    comparison rate
    Initial monthly repayment
    6.54% p.a.
    fixed 3 years
    6.22% p.a.

    Competitive rate tiers for investors only. Leverage the equity you have built up for a lower interest rate. Enjoy a super-fast application process. Split up to 10 loans against your property. Optional offset accounts. Unlimited fee-free transactions. Interest only option.

    Compare
    Details
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*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

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Investment home loans monthly snapshot: February 2024

The Reserve Bank of Australia (RBA) held the cash rate at 4.35% on February 6, thanks to the continued easing of inflation over the December quarter.

Mozo finance expert, Peter Marshall, believes cuts are on the way, however. 

“Most predictions are for a bit later in the year. But I feel that if the bad news keeps coming, the RBA may be forced to act sooner rather than later. 

“I wouldn’t be surprised if the first cut comes in September. Still, there’s a distinct possibility of it happening earlier than that if things go negative a bit faster than anticipated.” 

This is welcome news for property investors with skin in the game, and for those looking to invest in housing this year, as mortgage repayments may become more affordable for many in due course.  

Westpac and CommBank both echo the possibility of cash rate cuts this year, forecasting a 25 basis point (bp) cut in September. NAB expects the first cut to come in December. 

Of course, that’s still a while away – and hardly guaranteed. In the meantime, it’s important to compare investment home loans to ensure you’re getting the right product for you.

Your first port of call should be finding a low investment loan rate.

Investment home loans remain steady through the first half of February

The average variable rate investment loan (P&I, $400k, <80% LVR) in our database is 7.18% p.a. (as of 14 February 2024), which hasn't changed since 7 February. 

Our data also shows the median variable investor home loan rate is 6.70% p.a. (at 14 February 2024) So, when you compare investment home loans, make sure you keep an eye out for rates that start with a '6' where possible. 

The lowest variable investment home loan we track continues to be 6.04% p.a. (6.09% p.a. comparison rate*) from Easy Street – the Street Smart Variable Home Loan (P&I, $400k, <80% LVR). 

Of course, you’ll also want to consider if you want a loan with an offset account, or if there are any special offers you can take advantage of that might help you save. 

At the time of writing, there are several special offers from a range of lenders, including cashback offers, application and discharge fee waivers, insurance discounts, and discounts for emergency services workers.

Head back to the top of this page to see the latest rates, deals, and special offers! 

What are investment home loans?

Who can resist the allure of the buzzing property market? With perks like value growth, rental income, and useful tax breaks, buying an investment property can be a great arrangement.

However, like any major financial decisions, there are some things you’ll need to keep in mind. Here's a quick guide to comparing investment home loans as you look for the best one for you. 

What's a loan to value ratio (LVR)?

The Australian Prudential Regulation Authority has been putting pressure on banks to reduce their investment loans book to under a 10% growth per annum.

As a result major banks are beginning to put caps on the amount that investors can borrow and are generally implementing new eligibility requirements which requires investors to have a loan to value ratio of 80% or less.

If more lenders in Australia follow suit and you’re a first timer wanting to purchase your first investment property, you will either need to wait until you have saved up a 20% deposit (e.g. 80% LVR) or ask your parents to be your home loan guarantor. A guarantor will put up a portion of their own home as security for your investment loan to help you get approved.

Another thing to keep in mind is that when banks assess you for an investment property loan, they’ll conduct a stress test to see if you can comfortably service the loan at a higher interest rate. 

While this was once set at around 7%, this has been lowered to better reflect the current interest rate environment, and nowadays banks can now set their own minimum interest rate floor when determining a borrower’s serviceability. For an idea of how much you could afford to repay if rates were to climb, use our rate change calculator.

How does an investment home loan work? 

Investment loans function much the same as owner occupier home loans, in that a bank will lend you a certain amount, an interest rate (either variable or fixed) will be applied, and you’ll be expected to pay off the principal and interest over time. 

While the rates on investment home loans are typically higher than on owner occupier ones, there are a number of competitive options out there to help lower your costs. Investors will also have the option to make interest-only repayments, which can help free up more cash (not to mention increase a loan’s tax deductibility).

How to find the best investment loan for you

Determine your investment goals

Before setting out to find the right investment home loan, take a moment to consider what you want out of your property purchase. As an investor, you’ll have a different set of goals than someone who is buying a home to live in. Maybe you’re planning to buy a house to renovate and sell for a profit. Or perhaps your goal is to generate passive income by renting the property out to tenants.

Consider the features you want

Lenders offer a range of useful features with their loans, including offset accounts, line of credit facilities and repayment holidays. Some of these features can help you save on interest while others are simply designed to make having a loan more convenient. Determine which features you want and try to limit your search to loans that include them.

Compare interest rates

A low interest rate will help you save money, but don’t focus on the headline rate alone. When weighing up different options, make sure to compare apples with apples by using the comparison rate. This incorporates any fees associated with a loan, giving you a more accurate picture of how much it will cost over time.  

Review the loan fees

Any fees related to the loan will be factored into the comparison rate, but it helps to see these laid out in front of you so you know exactly what you’re paying for. Typical fees include application fees, valuation fees, conveyancing fees, and monthly service fees. You might also be charged extra for use of certain features, such as a redraw facility or offset account.

Think about your repayment plan

To keep home loan costs to a minimum, at least in the early stages of a loan, many investors opt to pay interest only. This can put you in a stronger financial position to renovate the property, make further investments, or direct money to higher interest debts. Just keep in mind that lenders generally only allow interest only repayments for a set period (e.g. the first five years of a loan).

Apply for pre-approval

If you’ve found a lender that seems suitable and you have an idea of the type of property you want to buy, you can apply for pre-approval. Your lender will ask for information about your financial situation and in return will give you an indication of how much you might be able to borrow. 

Some of the questions you should be prepared to answer include:

  • What is your income?

  • Do you have any debts?

  • Do you have any dependents?

  • What do your monthly expenses come to?

  • How much have you saved for a deposit?

Getting pre-approval is an important step in the house hunting process. Not only will it help you narrow your search to properties you can afford, it helps you stand out from all the other people at inspections who may not be serious about buying.

Just keep in mind that pre-approval isn’t a guarantee that you’ll eventually be approved. There’s always the chance your personal circumstances can change, and that’s to say nothing of market conditions and banks’ own lending standards. But if these remain steady, you should be able to obtain final approval without any major obstacles.

Complete the loan application 

Once you’ve found the right property and made an offer, the next step is to alert your lender so they can begin the process of formally approving your loan.

They will arrange a valuation of the property to make sure you haven’t offered more than it’s currently worth. Your finances will also be assessed a final time to confirm you can still comfortably afford to service a loan. 

If your home loan application is approved, you’ll be sent a Letter of Offer along with your loan documents. Review these carefully before accepting. Once you’ve signed and returned these to your lender, they will work with your solicitor or conveyancer to transfer the property to you.


What do banks look at when issuing investment loans?

As with any other loan, banks will want to see that you have a good credit history, genuine savings, and stable employment, but you might have to jump through a few more hoops. For example, a lender might request a statement of potential rent from a real estate agent. 

Typically, lenders would consider around 80% of rent from investment properties in their income assessments. But in the current climate, it’s not unusual to have a discount of as much as 50% applied to rental income. That means if you intend to rent out a property for $500 per week, your lender will only count $250 of that when determining your ability to service a loan.

Risks and Benefits of investment home loans

Before you dive into the world of real estate investing, it’s important you have a clear idea of both the risks and benefits. Below are some of the main ones you should know about.

Risks

Market fluctuations

There’s always the risk of mistiming your purchase and seeing the value of your property fall. That said, history shows the real estate market has a tendency to recover over time. Try to minimise your chances 

Stalled equity

There are two ways you can build up equity in your property: (1) through capital appreciation, and (2) by chipping away at the loan principal. But if you’ve opted for an interest only repayment plan, your principal will remain untouched. Depending on market conditions, the equity in your property could stall, or even go negative if property prices drop significantly.

Interest rate changes

Lenders tend to move their interest rates in response to decisions by the Reserve Bank, but ‘out of cycle’ rate changes are also common. Unless you’ve opted for a fixed rate loan, any changes will impact the regular repayments you’re required to make. 

Rental income uncertainty

Extended vacancies or changes in market conditions can disrupt your cash flow. We saw this early on in the pandemic period when international students returned to their home countries and the subsequent rise in vacancies caused Aussie rents to fall. 

Property maintenance and expenses

As an investor, you won’t just have to worry about the upfront costs of purchasing a property (such as stamp duty) or the ongoing costs of servicing a mortgage. You’ll also need to have money on hand for a number of other charges, including:

  • Maintenance and repairs

  • Property management

  • Water bills

  • Landlord insurance

  • Council rates

  • Strata fees

Overcapitalisation 

This occurs when you’ve spent more money on your property than you can reasonably expect to get back if you were to sell it. To avoid finding yourself in this position, avoid overbidding on a property and do a cost-benefit analysis of any renovations you plan to undertake ahead of time.

Benefits

Tax benefits

There are a number of generous tax benefits available to investors, including:

  • Negative gearing: when the income a rental property generates is less than the expenses  it incurs, you can deduct your losses against any other income you receive.

  • Claiming interest expenses: if you’ve borrowed money to purchase a rental property, you can claim the interest charged on the loan (or a portion of it) come tax time. 

  • Claiming other property expenses: you can also claim deductions for many other expenses associated with owning and maintaining an investment property, such as council rates, water charges, property agent fees, cleaning and pest control, and insurance. 

Potential capital growth

The property market in Australia has seen impressive growth over the long-term, and for many investors this has translated to substantial returns. But you don’t have to wait for market conditions to lift the value of your investment. Capital growth can also be achieved by renovating a property and making it more attractive to potential buyers.

Rental income

The ability to earn passive income is one of the main reasons people enter the property investment game. Depending on current levels of supply and demand, you might be able to receive enough rental income to cover your regular loan repayments, or at least a good chunk of them. 

Potential for leverage

A popular strategy among investors, leverage involves using the equity built up in one property to help secure a loan for another. So long as property values and rents are rising at the same time, investors might be able to repeat the process and keep adding to their property portfolio. 

There are a lot of risks involved with this strategy, however, so make sure you’re on strong financial footing and understand the current investing environment before you make any moves. 


Choosing the right investment home loan

Once you know you fulfil the requirements when it comes to the amount you’re looking to borrow, it’s time to think about the type of investment property loan you’ll sign up with. One of the more popular options is an interest only home loan.

Interest-only home loans

As the name suggests, unlike a standard home loan where you repay both the principal and the interest, with an interest-only investment loan you’ll only repay the interest. This means that your ongoing repayments will be significantly lower.

Consider this scenario: Sarah wants to borrow a total of $500,000 paid back over 25 years. Our home loan repayments calculator shows that with a 3% interest rate, if she chose the principal and interest repayment option, her monthly repayments would be $2,371. But if she opted for the interest only option for the first 5 years, during this period her ongoing payments would be brought down to $1,250.

Another reason interest only home loans are a popular option for investors is because of something called negative gearing, which means if the cost of repayments and looking after the property is more than your returns in rent, you can claim the home loan interest and property maintenance come tax time and potentially get a partial to substantial refund on that amount.

While the interest only period won’t last forever (generally just 5 years) and you’ll eventually have to start paying off both the interest and principal, you could negotiate at the end of the interest only period to have it extended for another 3-5 years.

But keep in mind, interest only home loans aren’t for everyone. The whole point of an interest only loan is you’re relying on your property’s value to increase over time. This can be risky if you’re buying in an area that could see a drop in property prices down the track, so in this instance you may be better off paying down both the principal and interest.

Variable, fixed, or split interest rate?

Whether you choose an interest only investment loan or the standard principal and interest repayments, you’ll be able to choose the type of interest rate to suit you.

  • Variable interest rate: The more popular option in Australia is the variable rate option, which changes in line with the official cash rate. The reason many investors opt for variable rate home loans is because they generally come with more features than fixed rate loans like an 100% offset account, which allows you to bring down the amount of interest you pay.
  • Fixed interest rate: By comparison, a fixed interest rate will mean your rate is locked in for the fixed rate period. While more and more providers are introducing fixed rate loans with an extra repayments facility (with a cap of around $10,000 per annum), fixed rate loans generally don’t come with an offset account.
  • Split interest rate: You could also consider splitting your investment loan, which means a portion will be variable allowing you to enjoy the benefits of an offset account on the variable amount and the remainder will be fixed giving you some security if your lender lifts rates.


Show transcript

What to look for in an investment home loan

Interest only repayments:

Opting for interest only repayments will see you paying much less than if you were repaying both the principal and the interest, plus you might be eligible for tax benefits.

Offset account:

This functions as an everyday bank account, with one key difference. It will be linked to your home loan, and any money you deposit will go towards offsetting the amount of interest you pay.

Line of credit facility:

If you’re thinking about renovating your home, an investment loan that comes with a line of credit could help. This works just like an overdraft account, allowing you to draw upon cash up to a set limit when needed.

Repayment holiday:

Chances are you’ll be relying on rental income to cover your repayments, but what do you do if you’re without a tenant for a period of time? An investment loan that lets you take repayment holidays could give you some breathing space.

 

What about features?

Offset account

An offset account functions much like an everyday bank account, except the funds held in the account are offset daily against the outstanding balance on your home loan. That means if you owe $300,000 on your mortgage and have $50,000 in a linked offset account, you’ll only be charged interest on $250,000. This can be an attractive option for borrowers, as it reduces the overall interest paid while preserving access to funds.

The type of offset account (and whether or not it’s available in the first place) will depend on your lender, so make sure to read over the details carefully. Some might offset only part of the balance against your home loan, while others might come with account-keeping fees which can cut into the financial benefits provided. You might also find there are conditions surrounding the types of transactions you can make.

Line of credit facility 

A line of credit allows you to access additional funds by drawing down on your loan. Similar to a credit card, there is a set limit (which usually depends on how much equity you have) and you’ll pay interest only on the amount borrowed. You’ll also be able to access funds fairly easily and benefit from interest rates which are typically lower than those of credit cards or personal loans. 

Repayment holidays 

As an investor you’ll most likely rely on rental income to cover the bulk of your home loan repayments, but things can get tricky if you're unable to find a tenant for an extended period of time. To assist during periods when market conditions aren’t in your favour, you might opt to take a repayment holiday. This lets you temporarily hit pause on your repayments, and is generally only available to borrowers who are ahead on their mortgage.

Comparing investment loans interest rates

Picking up your first investment property can be an exciting time, and having the right loan and interest rate on your side can help you save a bundle. Our Home Loans Interest Rates page not only makes home loan comparison easy, but allows you to find the right interest rate for your needs.


Picture of JP Pelosi
JP Pelosi
RG146
Managing editor

Jean-Paul (JP) Pelosi is an experienced journalist and editor who has contributed to many of Australia's leading media outlets including The Guardian, News.com.au, Domain.com.au, Investment Magazine and ANZ's Bluenotes. He has also edited news and communications for large financial services companies such as CommBank, Suncorp, Allianz and Amex. He loves a well told story and applying his editorial experience to content that readers both care about and enjoy. JP heads up our writing team.

More FAQs about investment loans

Are offset accounts important for investment loans?

Yes, once you’re signed up with an investment property loan, it’s a smart move to get your salary deposited into an offset account linked to your mortgage, rather than a bank account because you’ll reduce the amount of interest you pay.

Let’s go back to our scenario of investor Sarah. Once she is approved for her $500,000 investment home loan, if Sarah puts $30,000 worth of savings into a linked offset account, this will mean instead of being charged interest on the full $500,000, she would only accrue interest on $470,000. Once Sarah has saved up enough in her offset account, she can easily access the money to use it as her deposit for her next investment property, thus growing her investment portfolio.

What fees will I pay on an investment loan?

Just like any other home loan, there are some fees to watch out for when taking out an investment home loan. Here are the common charges:

Upfront fee: When you apply for an investment loan, the bank will have to run a credit check on you to see if you are a risky borrower. To cover this cost and any administration costs involved in assessing you for the investment property loan you may be charged a one off upfront fee anywhere between $0-$800.

Ongoing service fees: There may also be a small ongoing fee of around $10 that the lender charges for providing you with the loan.

Breakcost fees: Banned on variable rate loans back in 2011, breakcost fees can still be charged if you try to pay out a fixed rate loan early.

What documents will I need to apply for an investment home loan?

Each bank or financial lender will ask for different documentation when you apply for one of their investment loans, however generally they will require:

  • Identification: The provider will want to know who you are by obtaining a certified copy of documents like your passport, Australian driver’s licence, birth certificate, medicare and utility bills.
  • Income: They will want to determine whether you can comfortably service the investment home loan by seeing your latest PAYG Payment Summary from your employer, as well as your contract outlining your salary and a letter from your employer confirming the length of time you’ve held a position at the company.
  • Existing loans: If you have a credit card or personal loan you’re paying off, then the lender will usually ask for around 1-3 months worth of statements.
  • Genuine savings: You’ll also be asked to provide around 3 months worth of bank and savings account statements, so that they can see you are a diligent saver.

What are low doc home loans?

Often it can be hard for small business owners and sole traders to come up with the necessary paperwork like payslips or a letter from your employer for investment loans. So if you’re self employed or work under an ABN, you may need to apply for a home loan with more flexibility when it comes to documentation.

The solution is applying for a low doc home loan that allows you to have less documentation. But there’s a catch, usually the interest rate will be higher and you’ll also need to have a lower loan to value ratio of 60% (e.g 40% or more deposit).

Ready to kick off your investment property loans comparison? Scroll up to the top of this page to compare home loans in our investor table or punch in your numbers into our home loan comparison calculator to search our entire database.

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