Aussie investors could save more than $8,000 in one year from new loans.com.au offer

Online lender loans.com.au has launched a limited-time interest rate of below 2% for eligible investors today, which is the lowest rate available on Canstar’s database of investment home loans.

The discounted variable rate of 1.99% is available for one year for investors paying principal and interest or interest only on loans of up to $1 million with a loan-to-value ratio (LVR) of up to 80%, before it reverts to 2.74% (2.71% comparison rate).

To be eligible for this rate, investors must also have an owner-occupier loan from loans.com.au.

This is currently the lowest investment home loan rate on Canstar’s database, and could add up to considerable savings in interest costs for some investors.

With new Canstar survey data revealing investors are paying an average of 4.06%, this new record low rate for investors could see them pocket an extra $8,240 in the first year or $28,881 in five years.

It’s important to note that the above calculations don’t take into account the impact that loan fees could have on the total amount a customer pays on their loan. For example, the new loans.com.au product has a settlement fee of $300 and a valuation fee of $220 or the cost of the valuation, at the time of writing.

Canstar money expert Effie Zahos said interest rates falling below 2% might provide some respite to investors who had struggled in the financial fallout of the COVID-19 pandemic.

“The timing of this offer is great for landlords, with many of them hurting from a tough rental market with higher-than-normal rental vacancies and lower rental yields,” Ms Zahos said.

“The idea of bundling your home and investment property loan together can give you a bigger bargaining power with a lender. If you are going to bundle to bargain, then the variable discount offer from loans.com.au does offer the lowest investor rate around, although it’s only for a limited time.

“A potential downside of lower rates for property investors is that it can reduce negative gearing benefits. If that’s a concern, it’s generally best to speak to a tax expert.”

Ms Zahos said investors who were chasing a lower rate would still need to meet credit criteria to get approved to refinance right now.

She also said it could be worth being mindful that the rate could fluctuate even during the first 12 months, given the offer from loans.com.au is a discounted variable rate offer, not a fixed-rate offer.

“Given the current state of play in the economy it’s unlikely we’ll see variable rates move up for some time, and by that point investors will likely be looking at their loan again to make sure it’s still a good deal.”

Lowest investment home loan rates

Rates with principal and interest repayments

1. 1.99% (reverts to 2.74%) – loans.com.au’s Smart Booster Investor Bundle P&I Discount Variable – 1yr Intro*, up to 80% LVR (comparison rate 2.71%)
2. 2.49% – Homestar Finance’s Investment P&I Variable 150-850k 70%, up to 70% LVR (comparison rate 2.52%)
3. 2.59% – homeloans.com.au’s Low Rate Investment Loan P&I <60%, up to 60% LVR (comparison rate 2.61%)
4. 2.59% – Easy Street Financial Services’ Investor Standard Variable Home Loan P&I Special, up to 95% LVR (comparison rate 2.63%)
5. 2.59% – AMO Group’s Investment Variable, up to 70% LVR (comparison rate 2.68%)

Source: www.canstar.com.au – 24/08/2020. Based on variable investment home loans on Canstar’s database for a loan amount of $400,000, any LVR and principal & interest repayments. Comparison Rate calculated based on a loan amount of $150,000 repaid over 25 years. Read the comparison rate warning. List sorted in ascending order by rate, followed by comparison rate. *Only available to borrowers who also have an owner-occupier home loan with loans.com.au.

Rates with interest-only repayments

1. 1.99% (reverts to 2.74%) – loans.com.au’s Smart Booster Investor Bundle IO Discount Variable – 1yr Intro*, up to 80% LVR (comparison rate 2.71%)
2. 2.59% – Easy Street Financial Services’ Investor Standard Variable Home Loan IO Special, up to 95% LVR (comparison rate 3.53%)
3. 2.69% – Pacific Mortgage Group’s Investment Variable IO, up to 60% LVR (comparison rate 2.69%)
4. 2.69% –Homestar Finance’s Investment IO Variable 150-850k, up to 70% LVR (comparison rate 2.72%)
5. 2.74% – homeloans.com.au’s Low Rate Investment Loan IO, up to 60% LVR (comparison rate 2.66%)

Source: www.canstar.com.au – 24/08/2020. Based on variable investment home loans on Canstar’s database for a loan amount of $400,000, any LVR and interest-only repayments. Comparison Rate calculated based on a loan amount of $150,000 repaid over 25 years. Read the comparison rate warning. List sorted in ascending order by rate, followed by comparison rate. *Only available to borrowers who also have an owner occupier home loan with loans.com.au.

• 1-year fixed
• 3-year fixed
• 5-year fixed