Investment property home loans

Investing in property is a popular form of wealth management in Australia. Many investors are attracted by the tax advantages of negative gearing, and securing the right kind of investment property home loan can help to maximise your tax deduction. Check out the available investment property home loans on this page.

By   |   Updated 25th June 2020

Comparing investment property home loans for $450,000 over 30 years

Virgin Money Reward Me Fixed Rate Home Loan (3 years) $300K and above (Investor, Principal and Interest) LVR <80%

Virgin Money Reward Me Fixed Rate Home Loan (3 years) $300K and above (Investor, Principal and Interest) LVR <80%

Interest rate (p.a.)

2.69%

Comp rate^ (p.a.)

3.34%

Max LVR

80.00 %

Application fee

$300.00

Monthly repayment

$1,822.82

Total repayment

$656,215.20

Highlights

  • Competitive fixed rates for 1 to 5 years terms.
  • Additional repayments up to $10,000 per annum.
  • Reverts to the discounted variable rate on expiry of the fixed term.

Bank promo

  • Get a little something back with $2,500 cashback when you refinance with Virgin Money. Terms, Eligibility & Credit Criteria apply. New eligible refinance loans & companion account. Apply 18 May 2020 to 28 August 2020, settle by 30 October 2020. Min. loan amount of $300,000 and up to 80% LVR.
CUA Achieve Variable Home Loan ($250K-$499K - Investor, Principal and Interest)

On CUA's website

CUA Achieve Variable Home Loan ($250K-$499K - Investor, Principal and Interest)

Interest rate (p.a.)

3.11%

Comp rate^ (p.a.)

3.16%

Max LVR

90.00 %

Application fee

$835.00

Monthly repayment

$1,924.02

Total repayment

$692,647.20

Highlights

  • Get the best of both worlds – a low rate home loan for loans between $250,000-$499,999 and extra features.
  • Save on interest with mortgage offset - offset up to $15,000.
  • Enjoy $0 ongoing fee and free redraw.
  • The maximum LVR is inclusive of LMI.
ME Basic Home Loan (Investor, Principal and Interest) LVR 80% or less

On ME Bank's website

ME Basic Home Loan (Investor, Principal and Interest) LVR 80% or less

Interest rate (p.a.)

3.28%

Comp rate^ (p.a.)

3.30%

Max LVR

80.00 %

Application fee

$0.00

Monthly repayment

$1,965.85

Total repayment

$707,706.00

Highlights

  • Enjoy $0 application fee
  • Fee-free redraw
  • No ongoing fees
CUA Fixed Rates Home Loan (3 years – Investor, Principal and Interest)

On CUA's website

CUA Fixed Rates Home Loan (3 years – Investor, Principal and Interest)

Interest rate (p.a.)

2.69%

Comp rate^ (p.a.)

4.44%

Max LVR

90.00 %

Application fee

$835.00

Monthly repayment

$1,822.82

Total repayment

$656,215.20

Highlights

  • Enjoy low fixed rate for 3 years (Investor, Principal and Interest) for security with flexibility to pay extra.
  • Save with $0 ongoing fee.
  • Easy access to your cash with free redraw facility - whenever you need some breathing space.
  • Maximum LVR is inclusive of LMI.
Virgin Money Reward Me Fixed Rate Home Loan (2 years) $300K and above (Investor, Interest Only) LVR <80%

Virgin Money Reward Me Fixed Rate Home Loan (2 years) $300K and above (Investor, Interest Only) LVR <80%

Interest rate (p.a.)

2.99%

Comp rate^ (p.a.)

3.40%

Max LVR

80.00 %

Application fee

$300.00

Monthly repayment

$1,894.79

Total repayment

$682,124.40

Highlights

  • Competitive fixed rates for 1 to 5 years terms.
  • Additional repayments up to $10,000 per annum.
  • Reverts to the discounted variable rate on expiry of the fixed term.

Bank promo

  • Get a little something back with $2,500 cashback when you refinance with Virgin Money. Terms, Eligibility & Credit Criteria apply. New eligible refinance loans & companion account. Apply 18 May 2020 to 28 August 2020, settle by 30 October 2020. Min. loan amount of $300,000 and up to 80% LVR.
CUA Achieve Variable Home Loan ($250K-$499K - Investor, Interest only)

On CUA's website

CUA Achieve Variable Home Loan ($250K-$499K - Investor, Interest only)

Interest rate (p.a.)

3.46%

Comp rate^ (p.a.)

3.30%

Max LVR

90.00 %

Application fee

$835.00

Monthly repayment

$2,010.67

Total repayment

$723,841.20

Highlights

  • Get the best of both worlds – a low rate home loan for loans between $250,000-$499,999 and extra features.
  • Save on interest with mortgage offset - offset up to $15,000.
  • Enjoy $0 ongoing fee and free redraw.
  • The maximum LVR is inclusive of LMI.
ME Flexible Home Loan with Member Package $400k - <$700k (Owner, Principal and Interest) LVR 80% or less

On ME Bank's website

ME Flexible Home Loan with Member Package $400k - <$700k (Owner, Principal and Interest) LVR 80% or less

Interest rate (p.a.)

2.84%

Comp rate^ (p.a.)

3.29%

Max LVR

80.00 %

Application fee

$0.00

Monthly repayment

$1,858.61

Total repayment

$669,099.60

Highlights

  • Discounted rates
  • Options for a repayment holiday
  • 100% offset account
Virgin Money Reward Me Fixed Rate Home Loan (3 years) $300K and above (Investor, Interest Only) LVR <80%

Virgin Money Reward Me Fixed Rate Home Loan (3 years) $300K and above (Investor, Interest Only) LVR <80%

Interest rate (p.a.)

2.99%

Comp rate^ (p.a.)

3.38%

Max LVR

80.00 %

Application fee

$300.00

Monthly repayment

$1,894.79

Total repayment

$682,124.40

Highlights

  • Competitive fixed rates for 1 to 5 years terms.
  • Additional repayments up to $10,000 per annum.
  • Reverts to the discounted variable rate on expiry of the fixed term.

Bank promo

  • Get a little something back with $2,500 cashback when you refinance with Virgin Money. Terms, Eligibility & Credit Criteria apply. New eligible refinance loans & companion account. Apply 18 May 2020 to 28 August 2020, settle by 30 October 2020. Min. loan amount of $300,000 and up to 80% LVR.
CUA Accelerate Variable Home Loan (Investor, Principal and Interest)

On CUA's website

CUA Accelerate Variable Home Loan (Investor, Principal and Interest)

Interest rate (p.a.)

3.57%

Comp rate^ (p.a.)

3.62%

Max LVR

90.00 %

Application fee

$835.00

Monthly repayment

$2,038.33

Total repayment

$733,798.80

Highlights

  • Get a premium home loan complete with 100% offset.
  • Reach your property goals with a competitive rate.
  • Enjoy $0 ongoing fee and free redraw.
  • Maximum LVR is inclusive of LMI.
ME Flexible Home Loan with Member Package 3 years Fixed Rate (Investor, Principal and Interest) LVR >80% - 90%

On ME Bank's website

ME Flexible Home Loan with Member Package 3 years Fixed Rate (Investor, Principal and Interest) LVR >80% - 90%

Interest rate (p.a.)

3.09%

Comp rate^ (p.a.)

3.79%

Max LVR

90.00 %

Application fee

$0.00

Monthly repayment

$1,919.13

Total repayment

$690,886.80

Highlights

  • Discounted rates
  • Options for a repayment holiday
  • 100% offset account
Virgin Money Reward Me Fixed Rate Home Loan (3 years) $300K and above (Investor, Interest Only) LVR <80%

Virgin Money Reward Me Fixed Rate Home Loan (3 years) $300K and above (Investor, Interest Only) LVR <80%

Interest rate (p.a.)

2.99%

Comp rate^ (p.a.)

3.38%

Max LVR

80.00 %

Application fee

$300.00

Monthly repayment

$1,894.79

Total repayment

$682,124.40

Highlights

  • Competitive fixed rates for 1 to 5 years terms.
  • Additional repayments up to $10,000 per annum.
  • Reverts to the discounted variable rate on expiry of the fixed term.

Bank promo

  • Get a little something back with $2,500 cashback when you refinance with Virgin Money. Terms, Eligibility & Credit Criteria apply. New eligible refinance loans & companion account. Apply 18 May 2020 to 28 August 2020, settle by 30 October 2020. Min. loan amount of $300,000 and up to 80% LVR.
ME Flexible Home Loan with Member Package 2 years Fixed Rate (Investor, Principal and Interest) LVR >80% - 90%

On ME Bank's website

ME Flexible Home Loan with Member Package 2 years Fixed Rate (Investor, Principal and Interest) LVR >80% - 90%

Interest rate (p.a.)

3.18%

Comp rate^ (p.a.)

3.84%

Max LVR

90.00 %

Application fee

$0.00

Monthly repayment

$1,941.18

Total repayment

$698,824.80

Highlights

  • Discounted rates
  • Options for a repayment holiday
  • 100% offset account

Learn about investment property home loans

Find out what to look for when comparing home loans to invest in property.

  • FAQs

How do investment property home loans differ from owner-occupier home loans?

Investment property home loans typically have:

  • More stringent eligibility requirements in terms of creditworthiness and ability to continue servicing the loan in the event of an interest rate rise.
  • A higher loan-to-valuation ratio (LVR), which means that a higher deposit is likely to be required.
  • Slightly higher interest rates than owner-occupier loans

How much will I need as a deposit for an investment property home loan?

In recent times the Australian Prudential Regulation Authority (APRA) has insisted that lenders must reduce the growth rate in the number of investment property loans they make. As a result, many lenders have changed the loan-to-valuation ratio (LVR) they require to 80% or less. What this means is that if you are buying a property which the lender values at, say, $500,000, you will need a deposit of at least $100,000 (20% of the property’s value). If you do not have a 20% deposit you may have to pay a Lenders’ Mortgage Insurance (LMI) premium. LMI protects the lender against losses if you default on loan repayments and it cannot recover 100% of the amount you owe by repossessing and selling the property.

Young investors who do not have a 20% deposit could consider asking their parents to act as loan guarantors by allowing a part of the loan to be secured against a property their parents either own outright or have a substantial equity in.

What is an investment property home loan?

It is a type of loan used by purchasers of an investment property if they cannot afford to buy the property without loan finance. An investment property is usually purchased with the intention of renting the property to someone else, to create rental income and/or to realise a capital gain as property values increase. Investment property home loans are subject to conditions which are different from the conditions on loans offered to owner-occupiers.

What is negative gearing?

An investment property can be positively geared or negatively geared.

If it is positively geared, the property’s rental income is greater than the total cost of owning and maintaining it. The property owner must pay tax on the net rental income (the net profit) after deducting the cost of owning and maintaining the property.

If it is negatively geared, the property’s rental income is lower than the total cost of owning and maintaining it. The property owner effectively makes a loss every year on owning and renting out the property, but the loss can be used as a tax deduction against the property owner’s other income, such as income from employment, so that less tax is paid. The investor expects to make a capital gain when the property value increases.

The types of cost that can be offset against rental income as costs of owning and maintaining the property include:

  • Interest charges paid on the investment property home loan
  • Commission paid to real estate agents
  • Insurance for home and contents, and landlord insurance
  • Cost of maintenance, such as repainting, plumbing and electrical repairs
  • Local government rates
  • Capital works costs, e.g. rebuilding a wall, replacing a roof
  • Decline in value of depreciating assets such as a dishwasher, stove, washing machine

What other fees are attached to investment property home loans?

Other fees you may have to pay include:

  • Application/loan establishment fee
  • Lenders’ Mortgage Insurance if your deposit is less than 20% of the value of the property
  • Monthly or yearly administration fees
  • Early exit fee if you need to terminate the loan before the end of the agreed term
  • Loan discharge fee at the end of the loan term
  • Refinancing fee if you need to refinance the loan at the end of the agreed term (e.g. if you have an interest-only loan for five years, and then need to refinance)

What types of interest rate are available on investment property home loans?

Investment property home loans have the same types of interest rates available as residential property home loans:

  • Variable interest rate: Interest on the loan principal is charged at the lender’s standard variable interest rate. The interest rate may go up or down at any time, usually in response to a change in the Reserve Bank of Australia’s official cash rate, meaning that the required periodic repayment amount will also go up or down. Periodic repayments include a portion of the loan principal as well as interest charges. Variable interest rate loans are usually more flexible, allowing extra repayments to be made, and have features like a 100% offset account and a redraw facility.
  • Fixed interest rate: Interest on the loan principal is charged at the lender’s standard fixed interest rate. The interest rate, and the required repayment, will not change during the fixed rate period. Periodic repayments include a portion of the loan principal as well as interest charges. Fixed interest rate loans are usually less flexible. Although it may be possible with some loans to make extra repayments, it’s less likely that an offset account will be a part of the package.
  • Split interest rate: In this case a part of the loan is subject to a variable interest rate and the remainder is subject to a split interest rate. Periodic repayments include a portion of the loan principal as well as interest charges.
  • Interest-only loan: Periodic repayments cover interest charges only. No part of the loan principal is repaid during the interest-only period (usually between one and five years), so the loan amount does not reduce. It means that repayments will be lower than required for a ‘principal and interest’ loan, but the interest rate is likely to be higher. Interest-only loans are popular with investors because 100% of the periodic repayments are tax deductible, since they contain no loan principal component. However, interest-only loans are also more risky in a volatile property market, where the market value of the property could potentially decline to a level below the amount of the loan principal, resulting in ’negative equity’.

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