Investor home loans

ALASDAIR DUNCAN
If you’re in the market to buy an investment property, and plan to rent it out to tenants in order to make an income, then you may apply for an investor home loan to help you fund the purchase.

In this article, we’ll explain what investor home loans are and how they work, as well as consider the different kinds that are available in the marketplace. We’ll also share why giving accurate information on an investor home loan application is so important.

What is an investor home loan?

An investor home loan is a home loan that exists for people who wish to purchase a property that they will then rent out to make an income. These kinds of loans are different from standard owner occupier home loans, which are intended for people who plan to purchase a house and then live in it as they pay off their mortgage.

The distinction between investor home loans and those for owner occupiers is important. Generally speaking, lenders may offer a lower loan-to-value (LVR) ratio for an investment loan than they would for an owner occupier loan, meaning you might need a higher deposit. It may also be the case that investor home loans come with a higher interest rate attached than standard owner occupier home loans.

Why can investor home loans have higher interest rates?

When you purchase an investment property, it is likely that the rent payments you receive will go towards paying off your mortgage. If you are unable to find a tenant, or if the property is unoccupied for a period of time, it may potentially be difficult for you to meet your required repayments. For this reason, investor home loans can be riskier. Lenders factor this in as part of their broader consideration of your financial circumstances when you apply for a home loan, and they may offer you a higher interest rate as a result.

What kind of investor home loans are available?

In general terms, there are three kinds of home loans available to property investors – fixed rate loans, variable rate loans, and split loans, which are a combination of the first two. The key distinction between a fixed and variable loan is the way interest is calculated. With a fixed loan, the interest rate will remain the same over the lifetime of the loan, but with a variable one, it can fluctuate.


Compare Home Loans with Canstar

Lowest interest rates for 1-year fixed home loans

The comparison table below displays some of the 1 year fixed rate investment home loan products on Canstar’s database with links to lenders’ websites available for a loan amount of $350,000 at 80% LVR in NSW, and available for Principal and Interest repayments. The results are sorted by comparison rate (lowest to highest), then by provider name (alphabetically). Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loans comparison selector to view a wider range of home loan products. Canstar may earn a fee for referrals.

*Comparison rate based on loan amount of $150,000. Read the Comparison Rate Warning.

Lowest interest rates for 3-year fixed home loans

The comparison table below displays some of the 3 year fixed rate investment home loan products on Canstar’s database with links to lenders’ websites available for a loan amount of $350,000 at 80% LVR in NSW, and available for Principal and Interest repayments. The results are sorted by comparison rate (lowest to highest), then by provider name (alphabetically).Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loans comparison selector to view a wider range of home loan products. Canstar may earn a fee for referrals.

*Comparison rate based on loan amount of $150,000. Read the Comparison Rate Warning.

Lowest interest rates for 5-year fixed home loans

The comparison tables below displays some of the 5 year fixed rate investment home loan products on Canstar’s database with links to lenders’ websites available for a loan amount of $350,000 at 80% LVR in NSW, and available for Principal and Interest repayments. The results are sorted by comparison rate (lowest to highest), then by provider name (alphabetically).Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loans comparison selector to view a wider range of home loan products. Canstar may earn a fee for referrals.