A Guide To Debt Consolidation Loans

Key Points

  • Your investment mortgage loan is still called a ‘home loan’, even if you’re renting your property to a tenant and not living there yourself.

  • A loan against a property you’re renting out is called an ‘investor home loan.’ If you’re living in your property, you’ll want an ‘owner occupier home loan.’

  • Investor home loans typically attract a higher interest rate than an owner-occupier home loan.

  • Investment property loans are considered a higher risk for lenders than owner occupier loans.

Property investment involves wealth accumulation through rental income and capital gains. Negative gearing allows you to offset any costs and losses against your personal tax liability, even if these expenses surpass your rental returns.

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When it comes to choosing the right mortgage for your property investment, there are several factors to consider, such as:

  1. Interest Rate: A lower interest rate translates to more affordable loan repayments. Investment loan rates are higher than owner occupier rates so you’ll want to shop around.

  2. Fees: Examine any fees associated with your loan. Avoiding unnecessary charges maximise the return from your investment.

  3. Loan Features: Explore the mortgage features you want to access, such as offset accounts, which can help you build savings while reducing interest charges. This is especially beneficial for investors planning to convert their residence into an investment property.

  4. LVR (Loan to Value Ratio): Your LVR determines the amount you can borrow relative to the value of your investment property (i.e. your borrowing capacity). Compare lenders to find those offering favourable LVRs, keeping in mind that higher LVRs may come with increased borrowing costs. A good broker can usually help you find a lender with access to good valuations. This is important when you’re building up your property investment portfolio.

  5. Borrowing Capacity: Each lender has unique lending criteria. Comparing lenders to before committing to a specific loan or lender helps you find the best option for your investment property purchase.

  6. Repayment Options: You can opt for fixed or variable rate repayments, just like your owner occupier home loan. While variable rates offer flexibility, fixed rates provide stability by locking in your interest rate for a predefined period.

  7. Interest-Only Repayments: Investors have the option of interest-only repayments, starting with lower initial repayments but incurring higher long-term costs. This approach allows you to maximise your tax-deductible debt in the short term, but take care with this option and ensure you have an exit strategy for your investment property - and your investment property loan.

  8. Tax Deductions: Investors can benefit from tax deductions on expenses related to owning and maintaining their investment property, including loan fees, running costs and interest charges.

What are the risks and benefits of property investment?


  • Rental income provides immediate cash flow.

  • Capital gain potential over time.

  • Tax and depreciation benefits make property ownership more affordable.

  • Opportunity to increase investment value through renovations.


  • High upfront costs, including Lenders Mortgage Insurance (LMI), stamp duty, and inspections.

  • Ongoing expenses such as repairs, strata fees, and council rates.

  • Tenant management responsibilities.

  • Property liquidity challenges in case of needing to sell.

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Frequently Asked Questions

Can I borrow 100% of an investment property value?

Typically, a 20% deposit is recommended, but options exist for lower deposits.

Is it harder to get an investment loan?

Investment property loans can be more challenging to secure, due to the perceived higher risk. Property loans to investors typically attract higher interest rates, and you have to service for that, plus the 3% buffer on top in order to be approved for your loan. However, any potential rental income is taken into account on your loan application.

What is the average investment loan interest rate?

As of January 2024, the average variable rate for investment home loans is 7.24%*. It’s possible to find lenders with investment home loan rates on under 7%, though typically the lower your interest rate, the tougher your loan application process can be.

How much can you borrow for an investment property?

A 20% deposit is common, but some lenders accept as low as 5%.

What is the required LVR for an investment property?

LVR requirements vary, with most lenders preferring at least a 10% or 20% deposit.

What does an investment loan comparison rate mean?

The comparison rate for all home loans include the fees and charges in addition to the interest you’ll pay, providing an overall cost perspective.

How many investment loans can you have at once?

There is no set limit, but you do need to be in a very strong financial position to qualify for servicing multiple loans.

Can you claim interest on an investment loan?

You’re usually able to deduct the interest you pay on your investment loan, provided you’re declaring the income you make from it. Speak with your trusted financial adviser about your tax strategy around property investing.

Just like any other loan, it’s smart to shop around for your investment property loan. Speaking with a savvy mortgage broker is a wise first step - ideally one with experience in helping property investors build up their portfolio.


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This guide is opinion only and should not be taken as financial advice. Check with a financial professional before making any decisions.