Mozo guides

5 golden rules for buying your first investment property

Are you set on getting a foot in the property door but are unsure of where to start?

While investing in your first property is exciting, there are plenty of hurdles to overcome, like saving up the initial deposit and choosing the right property. In this guide, we’ve rounded up some of the golden rules when it comes to investing in property for the first time.

Home Loan Comparison Table - last updated 18 April 2024

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure
  • Mozo Expert Choice Badge
    Express Home Loan

    Owner Occupier, Principal & Interest, LVR <90%

    interest rate
    comparison rate
    Initial monthly repayment
    6.01% p.a. variable
    6.14% p.a.

    Get fast online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.

  • Flex Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    5.99% p.a.
    fixed 3 years
    6.37% p.a.

    Competitive Fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

  • Discounted Home Value Loan

    Owner Occupier, Principal & Interest, LVR 70-80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.09% p.a. variable
    6.09% p.a.

    Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).

  • Neat Home Loan

    Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.16% p.a.

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.


Let’s run you through them:

Golden rule #1 Save a decent deposit  

While home loans used to be available to investors with just a 5% deposit, these days many lenders have tighter restrictions for investment loans with most requiring you to have a deposit of at least 10%. So when you factor in the cost of stamp duty and lenders mortgage insurance, you should be aiming for a deposit of 20%.

Alternatively, you could ask a parent or family member to go guarantor on your loan, which means you would be able to take out a loan with a smaller deposit. Obviously, the major advantage of having a parental guarantor is you can get into the market sooner. Just keep in mind, there are risks attached, as your parent is liable for the portion of their property they put up as security for the loan.

Read our tell all guide, for extra advice when it comes to saving a deposit.

Golden rule #2 Decide on a suburb

Once you are on your way to having a solid deposit, you should do some research on websites like and to understand what properties are worth in 2-3 suburbs.

When creating a shortlist of suburbs, look for locations that are close to transport, shopping centres and amenities. That way you’ll always be able to rent out the property for a good return and are likely to see capital growth. But make sure you steer clear of properties on a main road that don’t have easy access to transport.

Golden rule #3 Beware of interest only loans

If you’ve spoken to a family member or friend that has an investment property, you’ve probably heard the term “interest only loan” thrown around.

  • Brief description: A standard home loan is when you repay both the interest and the principal (e.g the amount owed on the loan), whereas an interest only loan is when, for an introductory period of usually 1 to 7 years you only pay down the interest.

Interest only loans are an attractive choice for investors, as any interest you pay could potentially be claimed at tax time if your property is negatively geared and will also mean your repayments are lower.

However, interest only loans aren’t all they're cracked up to be. These days for the feature of only paying interest you’ll have to pay a premium, which we’ve found is roughly 40 basis points higher than if you were to pay both the principal and interest.So only go for this option if your cash flow is tight, as it’s a much wiser idea to pay down both the interest and principal in order to score that better rate.

Golden rule #4 Buy with your head

When the time comes to start inspecting potential investment properties, as an investor you should put your own preferences to the side and look for properties with the potential for capital growth that are likely to attract tenants. The property doesn’t necessarily have to be close to the CBD, but as we mentioned it does need to be in a good location and close to facilities.

Golden rule #5 Avoid buying at auction

Unless you’re really confident you’re going to get approved, buying at auction comes with a high risk attached - you could lose your deposit if you can’t gain finance.

When you buy in a private sale, you’ll get a 5 day cooling off period, which gives you time for the bank to value the property and sign you off with final approval. Whereas if you go down the auction route and find the bank won’t approve you for the amount you paid for the property you could land yourself in a minefield.

You will lose your 10% deposit and on top of this the seller could also take legal action if they can’t sell the property for what you offered.

So those are the 5 golden rules of investing for first timers...

Where to next on your investment journey?  

Well it depends what stage you’re at. If you’re still doing your recon work and getting

an idea of what’s involved in property investment, read our in depth buying an investment property guide.

  • Or get our home loan negotiators to haggle a great deal with the banks on your behalf by filling in your details here
Mozo Editorial
Mozo Editorial

Mozo’s team of experienced journalists and money experts provide news, insights, practical guides and expert analysis to help you master your personal finances. We follow editorial guidelines that focus on accuracy, reliability and timeliness; helping you make informed financial decisions with confidence and the most of your hard-earned money.

* 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.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.