Investment Property

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An investment property loan is a mortgage used to purchase real estate for investment purposes, such as renting it out for income or capital growth. These loans may have different interest rates and lending criteria, compared to owner-occupied loans.

Investment loans are assessed differently due to the added risk of relying on rental income. They may have:

• Higher interest rates
• Stricter approval criteria
• Different tax benefits (e.g. negative gearing)
  Loan structure is also often tailored to maximise returns and minimise tax.

Most lenders require a minimum of 10–20% deposit. However, a 20% deposit or higher is ideal to avoid paying Lenders Mortgage Insurance (LMI). Using equity from an existing property can also help fund your deposit.

Most lenders require a minimum of 10–20% deposit. However, a 20% deposit or higher is ideal to avoid paying Lenders Mortgage Insurance (LMI). Using equity from an existing property can also help fund your deposit.

Popular features for investment loans include:

• Interest-only repayments (to maximise cash flow)
• Offset accounts (to reduce interest)
• Redraw facilities
• The ability to split the loan (part fixed, part variable)
  A mortgage broker can help tailor a loan to your investment strategy.

Interest on your investment loan is can be tax-deductible. You may also be eligible for:

• Negative gearing benefits
• Depreciation claims
• Deductions for property expenses

Always speak to an accountant for tailored tax advice.

Interest-only loans are common among investors aiming to:

• Maximise tax deductions
• Improve cash flow
  

However, this can result in higher repayments later. Principal & interest loans reduce debt over time and may have lower interest rates. The right choice depends on your goals.

There’s no fixed limit, but each loan application will be assessed on your borrowing power, income, existing debt, and equity. With the right loan structure and planning, many investors build multi-property portfolios over time.

Common risks include:

• Property value fluctuations
• Vacancy periods with no rental income
• Rising interest rates
• Unexpected maintenance costs

Risk can be managed through loan structuring, proper research, and financial buffers.

A mortgage broker:

• Compares lenders and loan products
• Helps structure loans for tax efficiency and future growth
• Assists with paperwork and loan approval
• Provides ongoing support as your property portfolio grows