Compare investment loan rates

Find home loans from a wide range of Australian lenders that best suit your needs, whether you're investing, refinancing or looking to buy your first home. Compare interest rates, mortgage repayments, fees and more. - Data last updated on 24 Jul 2018

Compare investment loan rates

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Investment loan rates

If you're thinking about investing in a residential property there are a number of issues that you need to consider. It's not always easy to secure a loan for that type of investment, even when interest rates are very low. It will depend on where you are considering buying, as prices will be higher in desirable areas. They can also be higher if there is a lack of inventory available, so this needs to be factored into your decisions.

What is an investment loan?

It's not much different to a regular home loan, or mortgage – it's just that you will own the property bought with such a loan but won't occupy it yourself. Many people consider it a good investment because the property is likely to appreciate in value, provided it is looked after well, and there should be a steady rental income stream. As with normal mortgages, investments loans can be agreed at a variable interest rate, a fixed rate locking you into a specific rate for a period of time, or a split rate where you can choose a mix of variable and fixed.

How does an investment loan compare to other similar products?

Investment loan rates generally work the same way as a mortgage for the property of which you are the owner-occupier, and though it may not be as cheap as a standard mortgage, it is likely to be cheaper than taking out a large bank loan or other type of loan. That doesn't mean you shouldn't shop around, because financial companies are always looking for new customers and you could secure an attractive deal. Two types of loan that investors consider attractive are:

  • Interest only - where the borrowed sum remains the same but you only make interest payments on that sum until you sell the property or at the expiry of the interest only period.
  • Line of credit - where, if you own a property, you can tap into any equity that you've built up on it to use as a deposit for the investment property that you want to buy. You could think of it as a sort of credit card that has a big limit, but the loan's security is given by the equity in your home.

Tips to make it easier to get an investment loan

Loan companies want as much security as they can get: understandable because they want their money back. Very few things in the financial world are easy, but you can do a lot to help yourself.

Try to put down a sizable down payment – the more you're able to afford as a deposit, the more likely you could be offered a lower interest rate for repayments, saving you money in the long term.

Before approaching a lender, check out your credit score – the better your credit rating is, the more likely you are to pay less interest.

Research a variety of lenders and compare their various products – you might discover some very attractive deals as companies vie for your business.

FAQs

Bad credit home loans can be dangerous if the borrower signs up for a loan they’ll struggle to repay. This might occur if the borrower takes out a mortgage at the limit of their financial capacity, especially if they have some combination of a low income, an insecure job and poor savings habits.

Bad credit home loans can also be dangerous if the borrower buys a home in a stagnant or falling market – because if the home has to be sold, they might be left with ‘negative equity’ (where the home is worth less than the mortgage).

That said, bad credit home loans can work out well if the borrower is able to repay the mortgage – for example, if they borrow conservatively, have a decent income, a secure job and good savings habits. Another good sign is if the borrower buys a property in a market that is likely to rise over the long term.

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^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

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