Investment Home Loan Rates Background

Investment Property Home Loan Rates

Looking to invest in property? Use Canstar’s comparison tool and expert ratings to compare investment home loan rates and features

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6.34% Glossary
6.36% Glossary
$2,175.54 Glossary
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6.19% Glossary
6.54% Glossary
$2,141.37 Glossary
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6.29% Glossary
6.20% Glossary
$2,164.13 Glossary
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6.34% Glossary
6.40% Glossary
$2,175.54 Glossary
Suncorp Bank | Back To Basics | Special | Investor | LVR 70-80% | Variable
via a Canstar Certified Mortgage Broker
Suncorp Bank logo
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6.44% Glossary
6.45% Glossary
$2,198.45 Glossary
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6.39% Glossary
6.41% Glossary
$2,186.98 Glossary
Teachers Mutual Bank | Your Way Basic Home Loan | Investor | LVR ≤80% | Variable
via a Canstar Certified Mortgage Broker
Teachers Mutual Bank logo
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6.44% Glossary
6.50% Glossary
$2,198.45 Glossary
UniBank | Your Way Basic Home Loan | Investor | LVR ≤80% | Variable
via a Canstar Certified Mortgage Broker
UniBank logo
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6.44% Glossary
6.50% Glossary
$2,198.45 Glossary
BOQ | Economy Home Loan | Special | Investor | LVR 70-80% | Variable
Cashback
Up to $2,000 when you refinance with a BOQ home loan. 
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via a Canstar Certified Mortgage Broker
BOQ logo
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6.39% Glossary
6.53% Glossary
$2,186.98 Glossary
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6.19% Glossary
6.58% Glossary
$2,141.37 Glossary
ANZ | Simplicity Plus | Special | Investor | LVR 70-80% | Variable
Cashback
Up to $2,000 when you refinance with an ANZ home loan. 
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via a Canstar Certified Mortgage Broker
ANZ logo
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6.84% Glossary
6.84% Glossary
$2,291.08 Glossary
Westpac | Flexi First Option Introductory Loan | Investor | LVR 70-80% | 2 Yr Intro | Variable
via a Canstar Certified Mortgage Broker
Westpac logo
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6.84% Glossary
7.16% Glossary
$2,291.08 Glossary
ANZ | Simplicity Plus | Investor | LVR ≤80% | Variable
Cashback
Up to $2,000 when you refinance with an ANZ home loan. 
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Tooltip icon
via a Canstar Certified Mortgage Broker
ANZ logo
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7.99% Glossary
7.99% Glossary
$2,565.74 Glossary

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The initial results in the table above are sorted by Star Rating (High-Low) , then Comparison rate^ (Low-High) , then Provider Name (Alphabetical) . Additional filters may have been applied, see top of table for details.

What is an investment home loan?

An investment loan is a home loan that you take out specifically to fund the purchase of an investment property. If you plan on buying a property in order to rent it out and earn an income from your tenants, then you might decide to take out an investment property loan to fund this purchase.

How does an investment property mortgage work?

Investment home loans function in much the same way as other home loans do. A lender will loan a property buyer a sum of money, which is then paid back in regular instalments by the borrower, typically with interest included at a fixed or variable rate.

If you plan to live in the property, then you will apply for an owner-occupied home loan, whereas if you plan to rent it out, then you will apply for an investment home loan.

Learn more: Owner-occupied vs investment property

How do you apply for an investment property loan?

Applying for an investment mortgage is a similar process to applying for a loan for a house you intend to occupy. If you are curious about your options, you can compare investment property loans using Canstar’s comparison tool (by selecting the ‘investing’ option in the ‘Loan purpose’ field).

Explore: Compare top investment home loan rates

What are the requirements for an investment home loan?

As with any other type of loan, lenders will want to get a full picture of your finances before approving you for an investment mortgage. This will typically mean looking at your income, savings and credit history, as well as any liabilities and debts you might have, and if you have any equity in other properties.

If you wish to know more, you can also read Canstar’s guide to what lenders look for in a home loan application.

When buying an investment property, the lender will also need details about the home you would like to buy (unless you are seeking pre-approval before you’ve started to look). They will also consider the possible rent you may earn from it, vacancy rates in the area, how much the property might cost to maintain, capital growth potential, and other costs.

The lender will use this information to determine the size of loan they believe you will be able to pay back. While the lender will consider the potential rental yield of the property you plan to purchase, your current income will likely be a key consideration also.

Lenders typically attach stricter approval conditions to investment mortgages because they are seen as higher risk than other types of home loans. This is thanks to such things as the potential for rental properties to be vacant, as well as expenses associated with maintenance and the risk of damage from tenants.

Learn more: What you need to know if you’re applying for an investment loan

How much of a deposit do you need for an investment home loan?

While the size of the deposit you pay will ultimately depend on the price of the property you wish to purchase, investment home loans often require a lower loan-to-value ratio (LVR), meaning you may be required to pay a larger deposit upfront.

LVR describes the maximum proportion of the value of your home that can be loaned out to you. For example, a bank may approve your loan for 80% of the property value, in which you must pay the remaining 20% as your deposit.

Some lenders may permit property investors to pay a lower deposit in exchange for taking out Lenders Mortgage Insurance, or if you use another property as security for the loan.

Explore: Calculate your borrowing power

What types of investment loans are available?

When you take out an investment loan, you may be able to choose:

  • a fixed interest rate loan, which means your interest repayments will remain the same over the lifetime of the loan
  • a variable rate loan, which means they may go up or down as the lender adjusts its interest rates to suit the wider economic environment
  • a split loan, which will allow you to choose what percentage of your loan is paid back at a fixed rate, and what percentage is paid back at a variable one
  • an interest-only loan, for which only the interest portion will be paid off for a set period, typically one to five years.

Rates listed on Canstar’s home loans database show that, on average, the interest rates for investment loans will tend to be higher than those charged on owner-occupied loans. This is once again because lenders tend to view investment home loans as riskier than other types of mortgages.

How can property investors get the best home loan rates?

If you are looking for a favourable home loan interest rate, it can pay to compare lenders. You may have a home loan with one lender, and be tempted to take out another with the same lender if you purchase an investment property, simply because it seems more convenient. This could mean, however, that you might miss out on a more favourable rate with a competing lender. Rates listed on Canstar’s database show that there can be a large difference between the highest and lowest mortgage rates on offer.

When it comes to comparing home loans, the interest rate is an important consideration and can make a significant difference in the total cost of any loan. However, there are a number of other factors you may also want to consider. These factors include:

  • any fees attached to the loan
  • the features available, including whether it has an offset account or redraw facility.

If you are interested in an investment home loan, or simply want to get an idea of what rates are currently out there on the market, you can compare home loan rates and features with Canstar’s comparison tools, which include expert ratings.

And, as with all major financial decisions, it is important to do your research, compare your options and consider seeking professional financial advice before jumping in.

Explore: Best investment home loan rates

When you have an idea of what rates are on offer in the market, you may decide to then approach lenders and negotiate for a better deal.

To maximise your chances of being offered a discounted rate, you may need to demonstrate that you are a reliable borrower. One way to demonstrate that you are a reliable borrower is to save up as much money as possible for a property. If you already have another property all or partly paid off, you will have equity in that property, and you may be able to use this equity as a deposit.

Learn more: How to haggle for a lower home loan rate

What are the pros and cons of owning an investment property?

There can be a number of potential advantages and disadvantages to owning an investment property, and it is important to consider these carefully before purchasing one. Before buying an investment property or taking on an investment home loan, it could be a wise idea to consult a suitably qualified professional.

Potential benefits of an investment property

The possible upsides of owning an investment property may include:

  • having a source of long-term income, provided that it is positively geared (you have paid off the accompanying mortgage and choose to keep the property tenanted)
  • having an asset to pass down to future generations of your family
  • potential tax advantages, with the Australian Tax Office (ATO) stating that some of the costs of buying and maintaining an investment property can be claimed as tax deductions, called “negative gearing
  • the potential to see an increase in the value of your investment, thanks to the fact that house prices in Australia have generally grown over time, and are projected to grow further
  • the potential to use your investment property as equity when applying for other loans.

Potential drawbacks of an investment property

The potential downsides of owning an investment property may include:

  • the possibility that the property may sit vacant for a time, meaning you will need to pay the mortgage on it without the assistance of incoming rent
  • potential financial risks posed by tenants, who might damage the property, or might cost you money in legal fees if you need to initiate eviction proceedings
  • the cost of maintenance and expenses, which can vary depending on the age and condition of the home, although these costs may be offset by negative gearing
  • potential capital loss, if the market takes a turn and the value of your property is lower than the balance of your home loan, putting you in a position of negative equity.

What is negative gearing?

Negative gearing is a way for eligible investment property owners to potentially save money on tax, according to the Australian Taxation Office (ATO). In short, when you have an investment property but the money you earn in rent over the course of a financial year is less than the amount you spend on the property (in home loan repayments, repairs, fees and other costs), then the property is said to be negatively geared. According to the ATO, your investment property is negatively geared if your tax-deductible expenses on it over the course of a financial year are greater than the income you earn from it.

If you wish to know more, you can read our explainer on negative gearing and how it works

What is positive gearing?

A positively geared investment property is one that generates more in rental income than it does in expenses such as loan repayments and fees. A positively geared property can mean more cash flow, however, you may need to pay tax on these earnings – see the ATO website for more information.

If you wish to know more you can read our explainer on positive gearing and how it works.

 

How can you compare investment home loans?

If you’re considering purchasing an investment property and wish to compare investment home loans, you can compare home loans with Canstar. Below, you will find a list of additional resources that may be helpful, including a list of tips and guides for property investors, a glossary of common home loan terms, and some further information about the winners of Canstar’s Outstanding Value Home Loan Awards.

Compare home loan rates today with Canstar

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Author: Nina Tovey, Canstar Editor-in-Chief 

As Canstar’s Editor-in-Chief, Nina heads up a team of talented journalists who research and write articles to provide our readers with valuable insights about the home loan and property markets. Previously Nina founded her own agency where she provided content and communications support to clients around Australia for eight years. She also spent four years as the PR Manager for American Express Australia, and has worked at a Brisbane communications agency where she supported dozens of clients, including Sunsuper and Suncorp.

Nina has ghostwritten dozens of opinion pieces for publications including The Australian and has been interviewed on finance topics by the Herald Sun and the Sydney Morning Herald. When she’s not dreaming up ways to put a fresh spin on finance, she’s taking her own advice by trying to pay her house off as quickly as possible and raising two money-savvy kids.

Nina has a Bachelor of Journalism and a Bachelor of Arts with a double major in English Literature from the University of Queensland. She’s also an experienced presenter, and has hosted numerous events and YouTube series.

You can follow her on Instagram or Twitter, or Canstar on Facebook.

You can also read more about Canstar’s editorial team and our robust fact-checking process.


Author: Josh Sale, Home Loans Ratings Manager

Joshua Sale, Ratings ManagerAs Canstar’s Ratings Manager, Josh Sale is responsible for the methodology and delivery of Canstar’s Home Loan Star Ratings and Awards. With tertiary qualifications in economics and finance, Josh has worked behind the scenes for the last five years to develop Star Ratings and Awards that help connect consumers with the right home loan for them.

Josh is passionate about helping consumers get hands-on with their home loans, always reminding home buyers that finding the right loan can be as important for your finances as negotiating a fair property purchase price. Josh has been interviewed by media outlets such as the Australian Financial Reviewnews.com.au and Money Magazine, discussing topics including home loan equity and wider finance trends.

When it comes to Josh’s own property journey, the home loans expert once bought two houses in the same transaction when he ensured the cubby house his daughter loved was listed on the purchase contract for his new home. You can follow Josh on LinkedIn, and Canstar on Twitter and Facebook.

Latest in home loans

This content was reviewed by Deputy Editor Sean Callery and Sub-Editor Tom Letts as part of our fact-checking process.

See Canstar’s Award-winning home loan providers

Canstar’s Outstanding Value Home Loan Awards recognise the lenders that provide exceptional value to borrowers.

The 2022 Award winners:

Investment Variable Home Lender Award

This Award is given to Outstanding Value lenders across investment variable rate profiles. In alphabetical order, the winners are:

  • Freedom Lend
  • G&C Mutual Bank
  • homeloans.com.au
  • Homestar Finance
  • loans.com.au
  • Pacific Mortgage Group
  • Tic:Toc Home Loans
  • Well Home Loans

Investment Fixed Home Lender Award

This Award is given to Outstanding Value lenders across investment fixed rate profiles. In alphabetical order, the winners are:

  • Australian Mutual Bank
  • bcu
  • Greater Bank
  • HSBC
  • RACQ Bank
  • Reduce Home Loans
  • UBank
  • Well Home Loans

Investment Home Lender Award

This Award is given to providers who offer Outstanding Value across all investment profiles. In alphabetical order, the winners are:

  • Greater Bank
  • HSBC
  • MOVE Bank
  • Pacific Mortgage Group
  • Reduce Home Loans
  • Suncorp Bank
  • Tic:Toc Home Loans
  • UBank
  • Well Home Loans

If you wish to know more, you can find out why these institutions were recognised as part of Canstar’s Outstanding Value Home Lender Awards in 2022.

Home loan glossary of terms

Please note that these are a general explanation of the meaning of terms that may be used in relation to home loans or mortgages for investors.

The wording of loan terms and conditions may use different phrases or terms, and you should read the terms and conditions of the relevant loan to understand the features and cost of that loan. You cannot rely on these terms to be part of any loan you may take out.

Refer to the lender’s Key Facts Sheet and other applicable product documentation, and see Canstar’s Financial Services and Credit Guide (FSCG).

  • Comparison rate: An interest rate figure that represents the total annual cost of the loan, including the annual interest rate, monthly repayments, and most ongoing and upfront fees and charges. Under the law and on the Canstar website, all comparison rates for home loans are based on a $150,000 loan over 25 years (read the comparison rate warning). Learn about comparison rates.
  • Credit rating (credit score): An assessment (typically performed by specialised credit bureaus) of the creditworthiness of individual borrowers, based on their borrowing and repayment history (credit report). Lenders consider your credit rating when deciding whether or not to give you a loan, how much to loan you, and what interest rate you will pay. You can check your credit score for free with Canstar.
  • Deposit: In the context of home loans, a deposit is a percentage of the purchase price that you will typically need to save and pay upfront. Find out more about home loan deposits and how they work.
  • Debt-to-income ratio: A comparison that takes in the amount of debt you have relative to your overall income. Lenders may use this calculation as a way to measure your potential eligibility for a loan. Learn about debt-to-income ratios.
  • Fixed rate: A fixed rate home loan allows a borrower to lock in an interest rate for a particular period of time, typically from one year up to five years. The interest rate that the borrower pays will remain the same for that amount of time, regardless of changes in the RBA cash rate and other market conditions.
  • Guarantor: If someone ‘goes guarantor’ on your loan, it means that they are promising (‘guaranteeing’) that they will be liable for the loan if repayments are not made. The guarantor also means they must be able to demonstrate their own capacity to repay your loan. Learn about guarantors on home loans.
  • Introductory rate or honeymoon rate: An introductory rate offered to entice borrowers with a low advertised rate for the first few months of the loan. After the honeymoon period, the loan reverts to the standard variable rate offered by the lender. Use our Honeymoon Rate Calculator to estimate the cost of the loan over a specific period of time.
  • Lenders mortgage insurance (LMI): Insurance that the lending institution takes out in case of default from the borrower, which the borrower must pay for. Usually applies to home loans with a high LVR (more than 80%). Learn about LMI.
  • LVR (loan-to-value ratio): This is the maximum proportion of the value of your home that can be loaned out to you. For example, a bank may approve your loan for 80% of the property value, in which you must pay the remaining 20% as your deposit. Find out how LVR affects your interest rate and LMI.
  • Negative equity: Negative equity is when the market value of your property is lower than the balance remaining on your home loan. Find out more about negative equity
  • Negative gearing: When the income from an investment property is not enough to pay the interest on the home loan for that property, negative gearing is currently available as a tax deduction against that income. Learn about negative gearing.
  • Offset account: A savings account linked to your loan to offset the interest charged on your loan. The money (or credit) in your account is offset daily against your loan balance, which reduces the daily mortgage interest charges. Learn about offset accounts.
  • Positive gearing: When you borrow money to invest, and the income you earn from an investment is higher than your ongoing expenses, then the investment is positively geared. Learn about positive gearing.
  • Pre-approval: An initial approval process where the bank provides a borrower with an estimate of how much they could borrow, based on information they have provided to the bank. Find out how to get home loan pre-approval.
  • Principal: In the context of a home loan, the principal is the amount of money that you borrow from a lender. It can refer to the initial size of a loan, as well as the amount of money left to pay off on a loan.
  • Redraw: A home loan feature that enables the borrower to withdraw funds they have already paid. Usually this is conditional on a borrower being far enough ahead on loan payments, and based on the loan they have been approved for. A redraw facility is not available on all loans. Learn about the pros and cons of redraw facilities.
  • Settlement date: The date on which transfer of ownership officially takes place – the buyer pays the rest of the purchase price, and the final legal documents are exchanged. It is also usually the date on which the buyer receives the keys and assumes possession.
  • Split loan: A home loan in which a predetermined portion of the loan is locked in at a fixed interest rate and the rest comes with a variable rate of interest. Learn about split loans.
  • Stamp duty: The state or territory government’s tax calculated on the borrower’s loan amount. Calculate your stamp duty with our calculator.
  • Variable rate: A home loan interest rate that fluctuates according to the official cash rate set by the Reserve Bank of Australia. The rate can go up or down over time, varying your repayments.

Important information

For those that love the detail

This advice is general and has not taken into account your objectives, financial situation or needs. Consider whether this advice is right for you.

Canstar may earn a fee from its Online Partners for referrals from its website tables, and from sponsorship or promotion of certain products. Fees payable by product providers for referrals and sponsorship or promotion may vary between providers, website position, and revenue model. Sponsorship/promotion fees may be higher than referral fees. If a product is sponsored or promoted, it’s an ad and it is clearly marked as such. An ad might appear in different places on our website, such as in comparison tables and articles. Ads may be displayed in a fixed position in a table, regardless of the product's rating, price or other attributes. The location of an ad doesn’t indicate any ranking or rating by Canstar. Payment of fees for ads does not influence our Star Ratings. See How We Get Paid to find out more.

Home loan Star Ratings are updated monthly. The results don’t include every provider in the market and we may not compare all features relevant to you. Current rates and fees are displayed and may be different to what was rated. You can find a description of the initial sort order below the table. You can use the sort buttons at the top of each column to re-order the display. Learn more about our Home Loans Star Rating Methodology. The rating shown is only one factor to take into account when considering products. The table defaults to display only home loans available to somebody borrowing 80% of the total loan amount but you can use the filters to change this. Similar products might have different features and fees depending on the amount you borrow. Contact the lender for details.

The products and Star Ratings in the table might not match your exact inputs in the selector. Sometimes the methodology uses profiles with categories or bands (e.g. income, loan amount or monthly spend), but sometimes a single methodology, without any categories or bands, is applied.  The results will show the products that most closely match your selection, based on our profiles. If you are unsure about any terms used in the comparison table please refer to the glossary.

What is a Target Market Determination?

A Target Market Determination (‘TMD’) is a document that explains which people particular financial products may be suitable for (the target market) and sets out any conditions around how financial products can be distributed to consumers.

Why do product issuers provide Target Market Determinations?

From 5 October 2021, TMDs are compulsory for most financial products.

Issuers and distributors of financial products must take reasonable steps that are likely to result in financial products reaching consumers in the target market defined by the product issuer.

We recommend that you consider the TMD before making a purchase decision. Contact the product issuer directly for a copy of the TMD.

Any advice on this page is general and has not taken into account your objectives, financial situation or needs. Consider whether this general financial advice is right for your personal circumstances. Canstar provides information about credit products. We’re not suggesting or recommending a particular credit product for you. If you decide to apply for a loan, you will deal directly with the provider, not with Canstar. Consider the Target Market Determination (TMD) before making a purchase decision. Contact the product issuer directly for a copy of the TMD. It’s important you check rates and product information directly with the provider. For more information, read our Detailed Disclosure. ^Read the Comparison Rate Warning.

Before you elect to terminate or modify existing lending arrangements, we recommend you consider (i) your personal circumstances, and (ii) any associated fees, exit costs and application costs that may be applicable as well as the impact these changes could have on you. We suggest you consider seeking independent advice from a qualified adviser.

“Interest-only loan” generally means a loan where you will only pay interest during the interest-only term. That means you won’t be making payments which reduce debt during the interest-only term.

On some Home Loan products, you can choose to be referred to a mortgage broker who has been certified by Canstar according to our certification process. Mortgage brokers may not be able to offer loans from every provider. The loans included in the table are loans that Canstar Certified Mortgage Brokers can discuss with you, if you choose to do so. There may be more suitable loans for your personal circumstances.

If a broker successfully completes the Canstar certification process, they may pay Canstar a fee to use the official Canstar Certified Mortgage Broker badge. Canstar may earn a fee from the Canstar Certified Mortgage Broker, or the broker group they are affiliated with, if you settle a Home Loan via a Canstar Certified Mortgage Broker after being referred to the broker by Canstar.  Fees payable may vary depending on the home loan product and product provider.

Not all mortgage brokers available in the market have undertaken the certification process.  Canstar has invited a limited number of brokers to undertake the process, and only those brokers who have successfully completed the certification process are entitled to use the logo and wording “Canstar Certified Mortgage Broker”. Being certified as a Canstar Certified Mortgage Broker is not a representation that the holder’s mortgage broking services are superior to all other brokers who do not hold the certification.

Canstar Certified Mortgage Brokers are independent contractors, operate under their own Australian Credit Licence, or as Credit Representatives under an Australian Credit Licence, and are not Canstar’s agent or representative. They are not Home Loan product providers, but they can make recommendations to you about Home Loan products that may suit your needs. The broker may require you to enter into an agreement with them in relation to the services they can provide.  Canstar will have no knowledge of or input into the advice and product recommendations you receive from a Canstar Certified Mortgage Broker.

If you choose to be referred to a Canstar Certified Mortgage Broker, you will be taken to have accepted Canstar’s Terms of Use.

Your use of the Canstar Group’s Mortgage Broker Referral tool does not mean that you will be eligible to be approved for any particular home loan.