Get the Best Property Investment Loan in 2024

Table of Contents

Are you ready to dive into the world of property investment? Securing the best property investment loan rates can unlock your property portfolio’s full potential. With many loan types, interest rates, and strategies available, it’s crucial to have a deep understanding of the market to maximise your returns. Let’s explore how to find the best property investment loan for your needs and set the stage for a successful and lucrative property investment journey.

Short Summary

  • Understand the features of property investment loans and how they work.

  • Compare loan rates to get the best deal, plus research strategies for successful investing.

  • Prepare documents & monitor loan rates to ensure a successful 

Understanding Property Investment Loans

A person signing a document for a property investment loan

Investment property loans, or investment home loans, are mortgages specifically designed for property investors to purchase investment properties. Unlike owner-occupier home loans, investment loans may require a deposit of 10% or more of the property’s value, and it can be more challenging to secure a loan with a lower deposit. Additionally, lenders expect you to demonstrate sufficient income from employment to cover mortgage repayments and may only partially consider rental income from other investment properties.

Investment home loans often offer attractive features and benefits that can benefit property investors. Some lenders may allow borrowers to secure up to 90% or even 97% of the property’s value with lender mortgage insurance (LMI). Moreover, investment loans may offer minimal fees, offset accounts, additional repayments, redraw facilities, or the option to make interest-only repayments for a limited time.

Meeting the deposit requirements for an investment home loan can be challenging, but options are available to help you reach your goal. Utilising a guarantor loan or tapping into the equity of your existing property can provide full financing and put you on the path to purchasing your next investment property.

How Property Investment Loans Work

A family discussing their investment property loan options with a mortgage broker

Property investment loans typically have higher interest rates and fees than regular mortgages, as lenders assume investment property carries higher risks. When comparing property investment loans, it’s essential to consider the interest rate and the loan features that come with it. To be eligible for a property investment loan, you may need to deposit 10% or more of the property’s value. Saving as much as possible or using equity from another property as a deposit can help you secure a better rate.

Exploring tax benefits such as capital gains discounts, offsets, depreciation, deductions for repairs and maintenance, and negative gearing tax deductions can significantly improve your investment’s profitability. Additionally, conducting a recent comparable sales analysis and focusing on similar properties in the area can help you avoid overpaying for your investment.

You should seek professional advice from an accountant before making any significant decisions.

Interest Rates for Property Investment Loans

Interest rates for property investment loans come in three main types: fixed, variable, and split. A fixed interest rate ensures that your loan repayments remain consistent for a specified period, regardless of changes in the lender’s variable home loan rates. This consistency provides easier budgeting and potential savings in interest charges if variable rates increase. However, a fixed interest rate also means you won’t benefit from any interest savings if the lender decides to reduce variable rates.

On the other hand, variable home loans have interest rates that fluctuate up or down during the loan term. The variable rate can provide potential benefits or drawbacks depending on market conditions and the lender’s decisions.

A split home loan offers a combination of fixed and variable interest rates, giving borrowers the best of both worlds. Let’s explore the advantages of split home loans.

Advantages of Split Home Loans

A split home loan allows borrowers to divide their loans into two parts, with one part having a fixed interest rate and the other having a variable interest rate. This arrangement offers several benefits, including a sense of security from having a portion of the loan fixed and unaffected by future interest rate changes.

With a portion of the loan variable, borrowers also have the potential to benefit from future adjustments in interest rates. If rates decrease, having more of your loan as a variable allows you to take advantage of the lower rates.

Split home loans may provide freedom and protection, enabling additional payments on the variable part, setting up offset sub-accounts, and guarding against future interest rate fluctuations.

Repayment Options for Property Investment Loans

Mortgages for investing purposes come with two different repayment options. These are interest-only and principal-and-interest repayments. Interest-only loans allow you to pay just the interest on the loan for a set period, while principal-and-interest loans require payments towards both the interest and the principal.

Each repayment type offers distinct advantages, which we’ll explore further in the following subsections.

Benefits of Principal-and-Interest Repayments

Principal-and-interest (P&I) repayments pay off the principal and loan interest together. This repayment type may suit borrowers who have already cleared their non-deductible home loan.

P&I repayments provide two significant advantages: building up your property’s equity over time and paying off your loans faster, saving on interest in the long run. However, the principal portion of the P&I repayments is not tax-deductible. Again, you should seek advice from your accountant.

Pros of Interest-Only Repayments

Interest-only home loans allow you to pay only the interest for a certain period, usually two to ten years. These loans are popular for investment properties due to their tax-deductible interest and smaller monthly repayments than principal-and-interest loans.

The extra money saved from interest-only payments can be used to invest in other ventures, helping to grow your property portfolio.

Key Features of an Ideal Property Investment Loan

A family discussing the key features of an ideal property investment loan

Property investment requires a well-crafted strategy, starting with finding the best investment home loan. An ideal property investment loan should include features that can reduce the overall cost of the loan, such as offset accounts, redraw facilities, and the option to make extra repayments. Lowering the cost of an investment home loan is crucial, as it can save a significant amount of money.

An offset account can be especially beneficial for investors, as it allows them to lower the interest they pay on their loan and potentially save enough money to purchase another investment property. The ability to choose repayment frequency, such as setting up a fortnightly repayment schedule, can also help save on your home loan by allowing you to make additional repayments.

Focusing on these key features ensures that your property investment loan works to your advantage and maximises your returns.

Eligibility Criteria for Property Investment Loans

Applying for an investment home loan involves strict eligibility requirements. You must prove you have enough income to cover the repayments, including rent from other investment properties. When calculating your income, lenders will only partially consider rental income from other properties. They usually reduce the rental income by 10%.

Lenders also consider various factors when approving investment mortgages, including potential rental income, vacancy rates, maintenance costs, capital growth prospects, and other expenses. Due to the increased risk associated with investment home loans, lenders may be more cautious when assessing potential liabilities that could impact borrowing power.

Comparing Property Investment Loans

Comparing investment home loans is essential in securing the best deal and finding the lowest rates available in the market. When comparing property investment loans, it’s vital to consider the interest rates, loan features, and benefits. A mortgage broker can play a crucial role in finding the best rates, as they can access deals that aren’t typically advertised and negotiate with lenders on your behalf.

It’s worth investing time and effort in researching and comparing investment home loan rates to ensure you’re making the most informed decision for your property investment journey.

Strategies for Successful Property Investment

A family discussing strategies for successful property investment

For greater success in property investment, it’s essential to employ effective strategies. Conducting thorough market research and understanding the tax implications of property investments can significantly impact your investment’s profitability. In addition, creating a budget for unexpected expenses and having a long-term outlook for property investing can help you stay on track and navigate market fluctuations.

One useful strategy may be setting up cash flow buffers in offset accounts, providing flexibility to cover surprise costs or manage cash flow shortages. By implementing these strategies, you can set yourself up for success in the property investment market.

Applying for a Property Investment Loan

When applying for a property investment loan, it’s crucial to be prepared and follow a few essential tips. First, consider speaking with a mortgage broker in Melbourne to help you navigate the loan application process and secure the best rates. Additionally, gather all necessary documents, such as proof of income, bank statements, and other supporting documents.

Understanding the eligibility criteria and various loan options is essential for a successful application.

Monitoring Your Property Investment Loan Rates

Regularly monitoring your property investment loan rates ensures you get the best deal possible. By closely monitoring your loan rates, you can make informed decisions about refinancing or adjusting your loan terms as needed.

Market changes and fluctuating vacancy rates can also impact property investing, making it essential to stay up-to-date with market trends and adjust your strategies accordingly. By proactively monitoring your property investment loan rates and adapting to market conditions, you can make the most of your investment and maximise your returns.


In conclusion, finding the best property investment loan rates is crucial to a successful property investment journey. Understanding the different types of loans, interest rates, repayment options, and eligibility criteria can help you make informed decisions and maximise your returns. You can unlock your property portfolio’s full potential by comparing investment home loans, employing effective property investment strategies, and monitoring your loan rates regularly.

Remember that investing in property requires a well-crafted strategy, and finding the best investment home loan is the first step in that journey. With dedication, research, and a keen eye on the market, you can set yourself up for success in the world of property investment.

Frequently Asked Questions

Generally speaking, you can borrow up to 100% of the property value, depending on your financial situation and whether or not you have a guarantor. If not, then you may only borrow a maximum of 90%.

Whatever you decide, it’s important to ensure that you can keep up with repayments in the long run.

For an investment property in Australia, you generally need a minimum of 10% deposit plus costs and government fees for the purchase. It can be from your savings or through equity on your existing home.

Lenders Mortgage Insurance may apply if the deposit is lower than 20%.

Given the complexity of mortgages for investment properties, it is recommended that you use a mortgage broker to help find the best options available for your specific needs. With their expertise and experience, they can easily guide you through the process and ensure you get the best possible outcome.

Mortgage brokers usually know the different types of mortgages available and can help you find the one that best suits your needs. They can also advise structuring your loan and help you understand its terms and conditions.

The maximum loan-to-value ratio (LVR) for an investment property can be as high as 97% (including the LMI premium), meaning that you can borrow up to 94% of the property’s purchase price, and 3% is the approximate cost of the LMI. This allows you to finance your property with a lower out-of-pocket deposit.