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Loan purpose

Loan amount

$

Deposit

Loan Term

151015202530

25 years

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Comparison Rate - Low to High
Product

Low Rate Home Loan - Prime (Investment) (Principal and Interest)

Real Time Rating™

2.31

/ 5
Interest Rate

2.79

% p.a

Variable

Comparison Rate*

2.79

% p.a

Company
Repayment

$1,390

monthly

Features
Redraw facility
Offset Account
Borrow up to 60%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

2.31

/ 5
Go to site
Product

Variable Rate Investment Loan – Refinance Only

Real Time Rating™

1.72

/ 5
Interest Rate

2.94

% p.a

Variable

Comparison Rate*

2.86

% p.a

Company
Repayment

$1,413

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

1.72

/ 5
Go to site

special

Receive an extra 0.01% p.a. discount every year, up to a maximum discount of 0.30% p.a.
Product

Low Rate Home Loan - Prime (Investment) (Principal and Interest)

Real Time Rating™

2.06

/ 5

Winner of Best Investor Home Loan, RateCity Gold Awards 2022

Interest Rate

2.89

% p.a

Variable

Comparison Rate*

2.89

% p.a

Company
Repayment

$1,406

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

2.06

/ 5
Go to site

Winner of Best Investor Home Loan, RateCity Gold Awards 2022

Product

Low Rate Home Loan - Prime (Investment) (Interest Only)

Real Time Rating™

1.76

/ 5
Interest Rate

3.09

% p.a

Variable

Comparison Rate*

2.89

% p.a

Company
Repayment

$773

monthly

Features
Redraw facility
Offset Account
Borrow up to 60%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

1.76

/ 5
Go to site
Product

Yard Investor Bundle Loan

Real Time Rating™

1.94

/ 5
Interest Rate

2.90

% p.a

Variable

Comparison Rate*

2.92

% p.a

Company
Repayment

$1,407

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

1.94

/ 5
Go to site
Product

Well Balanced

Real Time Rating™

1.81

/ 5

Winner of Best Investor Home Loan, RateCity Gold Awards 2022

Interest Rate

2.92

% p.a

Variable

Comparison Rate*

2.95

% p.a

Company
Repayment

$1,410

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

1.81

/ 5
Go to site

Winner of Best Investor Home Loan, RateCity Gold Awards 2022

Product

Yard Investor Loan

Real Time Rating™

1.84

/ 5

Winner of Best Investor Home Loan, RateCity Gold Awards 2022

Interest Rate

2.94

% p.a

Variable

Comparison Rate*

2.96

% p.a

Company
Repayment

$1,413

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

1.84

/ 5
Go to site

Winner of Best Investor Home Loan, RateCity Gold Awards 2022

Product

Back to Basics Home Loan Special Offer

Real Time Rating™

2.64

/ 5
Interest Rate

2.95

% p.a

Variable

Comparison Rate*

2.96

% p.a

Company
Repayment

$1,415

monthly

Features
Redraw facility
Offset Account
Borrow up to 70%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

2.64

/ 5
Go to site

Cashback

Receive up to $4,000 cash when you take out an eligible Suncorp Bank home loan. Receive either $3K by taking out a Suncorp Bank home loan of $750K+ or $4K by taking out a Suncorp Bank home loan of $1m+ with LVR ≤90%. Apply by 30 November 2022, settle by 28 February 2023. Unless withdrawn prior. T&Cs & eligibility criteria apply. ~ Ends in 5 months
Product

Low Rate Home Loan - Prime (Investment) (Interest Only)

Real Time Rating™

1.76

/ 5
Interest Rate

3.19

% p.a

Variable

Comparison Rate*

2.99

% p.a

Company
Repayment

$798

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

1.76

/ 5
Go to site
Product

Smart Booster Investor Bundle Discount Variable - 1 Year (Principal and Interest)

Real Time Rating™

1.76

/ 5
Interest Rate

2.74

% p.a

Intro 12 months

Comparison Rate*

3.46

% p.a

Company
Repayment

$1,500

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

1.76

/ 5
Go to site
Product

Ocean Variable Investment

Real Time Rating™

2.05

/ 5
Interest Rate

3.09

% p.a

Variable

Comparison Rate*

3.57

% p.a

Company
Repayment

$1,437

monthly

Features
Redraw facility
Offset Account
Borrow up to 60%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

2.05

/ 5
Go to site
Product

SMSF 80

Real Time Rating™

1.33

/ 5
Interest Rate

4.44

% p.a

Variable

Comparison Rate*

4.45

% p.a

Company
Repayment

$1,657

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

1.33

/ 5
Go to site
Product

Ocean SMSF (With Offset)

Real Time Rating™

1.67

/ 5
Interest Rate

4.59

% p.a

Variable

Comparison Rate*

4.80

% p.a

Company
Repayment

$1,683

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

1.67

/ 5
Go to site
Product

Ocean SMSF (No Offset)

Real Time Rating™

1.46

/ 5
Interest Rate

4.59

% p.a

Variable

Comparison Rate*

4.80

% p.a

Company
Repayment

$1,683

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

1.46

/ 5
Go to site
Product

Ocean SMSF (With Offset)

Real Time Rating™

1.67

/ 5
Interest Rate

4.59

% p.a

Variable

Comparison Rate*

4.80

% p.a

Company
Repayment

$1,148

monthly

Features
Redraw facility
Offset Account
Borrow up to 60%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

1.67

/ 5
Go to site
Product

Fixed Rate Home Loan (with Advantage Package)

Real Time Rating™

1.16

/ 5
Interest Rate

4.74

% p.a

Fixed - 2 years

Comparison Rate*

5.12

% p.a

Company
Repayment

$1,185

monthly

Features
Redraw facility
Offset Account
Borrow up to 60%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

1.16

/ 5
Go to site

Cashback

Receive $4000 in cashback when you refinance
Product

Fixed Rate Investment Property Loan

Real Time Rating™

1.16

/ 5
Interest Rate

5.19

% p.a

Fixed - 2 years

Comparison Rate*

5.88

% p.a

Company
Repayment

$1,787

monthly

Features
Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

1.16

/ 5
Go to site

Embed

What is an investment loan rate?

Many of the major steps involved with shopping for an investment property are not too dissimilar to shopping for a family home. Likewise, home loans for investment properties offer similar features to owner occupied home loans, but with a few key differences.

You're likely to discover that the interest rates offered will vary considerably if you are borrowing to invest, and that the loan-to-value ratio (LVR) likely needs to be lower. However, you'll still find many variable rate and fixed rate loans available, as well as ones that have offset accounts and flexible repayment options.

How does an investment loan rate differ from an owner occupier rate?

Depending on your loan provider and the deal you're offered, you may discover that the interest rate charged for an investment property is a little higher than for a property you will be living in. 

You might also find that you'll need a larger deposit to secure the loan, but otherwise you should be able to find a suitable option from the variety of products lenders have available. If you don't have a deposit of at least 20 per cent, you'll more than likely be required to pay for lender's mortgage insurance (LMI), and the interest rate you are offered may in turn be higher.

The market for investment loans is extremely competitive in Australia, so you can make comparisons to work out what will be the best fit for your personal circumstances.

Another thing to keep in mind is that the eligibility criteria for investment loans tends to be more strict than for owner occupier loans. So, it's important to make sure you meet them before applying.

Do investment property loans have higher interest rates?

On average, investment loan rates tend to be higher than owner-occupier loan rates. This is largely because lenders tend to see property investors as a higher risk than owner-occupiers, as there's likely to be less of a chance that a home owner will risk missing mortgage repayments on a home they live in. Plus, property investors could face challenges with the tenancy from time to time, resulting in loss of rental income and potentially putting strain on their ability to meet their loan repayments.

The loan repayment type can also influence the interest rate you may be offered. Principal & interest home loans, where the borrower makes repayments towards both the principal loan amount and the interest charges, typically offer a lower interest rate than interest only home loans, where repayments don't make a dent in the loan principal for a set period.

As interest only home loans are often favoured by property investors for a number of reasons, this may contribute to investment property loans having higher interest rates on average than owner-occupied loans.

The lowest investment property home loan interest rates

Home loan interest rates fluctuate regularly in line with the official cash rate and the rest of the market, but here are some of the lowest investment loan rates available at the time of writing:

Making a comprehensive comparison can help you find the best interest rates available to suit your personal circumstances. Visit RateCity's home loan leaderboards for real-time results.

What type of home loan is best for an investment property?

Two key home loan types that are important to consider as an investor are principal and interest loans and interest only loans. 

Many property investors prefer interest only home loans, as this repayment type can help keep your monthly costs down, relieve pressure on your finances, and help make your budgeting a little more manageable. 

Borrowers can typically only make interest only mortgage repayments for a set amount of time before the loan reverts to principal and interest repayments. Once your loan reverts to paying principal and interest, your monthly repayments will cost more and your principal will gradually begin to reduce. Keep in mind that by choosing to pay only interest for a period of time will mean you’ll end up paying more in total interest over the life of the loan than if you’d been on a principal and interest loan from the start.

One of the reasons a property investor may choose an interest-only home loan is to avoid paying down their home loan principal, as their long term goal isn't to own the property outright. Instead, they minimise their mortgage payments to maximise their rental yield in the short term, and wait for the property to increase in value over the long term. This capital growth may allow the investor sell the property for more than they bought it for, or they could use the equity to refinance their mortgage or apply for a second loan on another investment property.

It's important to note that there are certain risks involved with interest only loans. Consider reaching out to a mortgage broker before you enquire about this type of loan.

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Who offers the best investment property home loan interest rates?

When it comes to finding a home loan, there's no single best investment home loan rate. The best rate for your needs will be dependent on a number of different factors. Consider the following when comparing home loan products:

Interest rates

You'll need to choose between a home loan with a variable interest rate, where the interest you’re charged on each repayment may fluctuate periodically, or a fixed rate home loan that's fixed for typically up to five years.

While a fixed interest rate might protect you from interest rate rises for a period of time, you'll miss out on savings if rates fall during the fixed rate period. Plus, you may not be able to benefit from as many flexible features and benefits, and you may be faced with substantial break fees if you choose to refinance during the fixed term. Plus, once the fixed rate term comes to an end, your loan will revert to the lender’s standard variable rate, which could lead to bill shock if interest rates have risen considerably.

Fees

In addition to interest charges, most lenders will also charge certain upfront or ongoing fees, including:

  • Application fees
  • Establishment fees
  • Settlement fees
  • Other monthly fees
  • Extra repayment fees
  • Redraw fees

Comparison rates

A loan's comparison rate combines the interest rate with its standard fees and charges to give you a better idea of the total cost of the loan. 

Keep in mind that comparison rates tend to not include extra fees, such as fees for accessing optional home loan features, so it’s still important to carefully compare home loans before making a choice.

Features

What one home loan offers may differ from the next, particularly when it comes to extra features. Some of the features that you may find beneficial include the option to make extra repayments, a redraw facility that allows you to redraw any of the additional repayments you've made, or an offset account. Keep in mind, however, that home loans packed with extra features and flexibility tend to come with higher interest rates and fees than no-frills home loans.

Loan term

The loan term is the length of time you have to pay off the loan. Most home loans have loan terms of 25 or 30 years. Generally speaking, the longer the loan term, the smaller your repayments will be, but the more you'll pay in interest charges over the life of the loan.

It's particularly important to keep the loan term in mind if, or when, you refinance your home loan, as you'll want to be careful not to extend it unintentionally after paying down your mortgage for a number of years.

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Where should investors consider property?

There are many factors to consider when deciding on a location in which to buy your investment property. But the key driving factors for most property investors is capital growth and/or rental yield. Capital growth is the amount the property has increased in value, and rental yield is the profit you make on renting out your property once expenses are covered, expressed as a percentage of the value. 

The locations where properties tend to see the highest rental yields are often not the same locations that see the highest capital growth. So, it's important to consider your goals before deciding on a location to invest.

Based on data released by CoreLogic, here are the gross yields recorded in capital cities and regional markets as at April 2021:

  • Sydney - 2.4%
  • Melbourne - 2.6%
  • Brisbane - 4.0%
  • Adelaide - 4.1%
  • Perth - 4.3%
  • Hobart - 4.4%
  • Darwin - 5.6%
  • Canberra - 4.0%
  • Regional NSW - 4.1%
  • Regional VIC - 4.0%
  • Regional QLD - 4.9%
  • Regional SA - 5.6%
  • Regional WA - 5.9%
  • Regional TAS - 4.7%
  • Regional NT - 6.3%

CoreLogic data also revealed the capital gains for houses in the same locations for the 12 months to April 2021:

  • Sydney - 10.4%
  • Melbourne - 2.2%
  • Brisbane - 9.6%
  • Adelaide - 11.1%
  • Perth - 6.9%
  • Hobart - 14.3%
  • Darwin - 18.2%
  • Canberra - 16.0%
  • Regional NSW - 16.3%
  • Regional VIC - 11.0%
  • Regional QLD - 13.2%
  • Regional SA - 14.0%
  • Regional WA - -0.7%
  • Regional TAS - 17.8%
  • Regional NT - 11.5%

Keep in mind that COVID-19 pandemic related economic and lifestyle factors, and historically low interest rates, significantly influenced the real estate market in the 12 months to April 2021, and past growth does not indicate future growth. Be sure to do your research and ensure you understand the potential influencing factors in the locations you are interested in investing before making a decision on where to buy.

Also note that the above data relates to houses only. Rental yields and capital growth figures often vary significantly between houses and units.

Does investment property location affect interest rates?

The location of your investment property shouldn't have an effect on your home loan's interest rate, but it could affect the outcome of your bank valuation. When you apply for a home loan to buy a property, the bank will complete a valuation on the property before granting approval, in order to determine the loan-to-value ratio and whether the property is enough to secure the loan. Because the property's location is one of the factors that's assessed in a valuation, it can contribute to the outcome. That's why it's important to do your due diligence when looking for a suitable location for your investment property.

As with any financial product, be sure check for any disclaimers and read the lending criteria and product disclosure statement (PDS) before submitting a new home loan application. And if you have any other questions or queries, visit the lender's website or enquire directly.

For more information or advice specific to your personal circumstances, consider reaching out to a mortgage broker or financial adviser.

Is a second mortgage tax deductible?

If you take out a loan to invest in a property, you can claim a tax deduction on the interest you pay as long as the property is earning income. In other words, if you rent the property for the entire year, you can claim a tax deduction for 12 months of interest payments. But, if you use the home for six months and rent it for the other six months, you can claim deduction only for 50 per cent of the interest amount.

You also get tax benefits for items that lose value over the years. But, the entire amount is not allowed as a tax deduction in the same year; instead you’ll have to claim a portion each year over a number of years. 

Additional borrowing costs, such as maintenance fees, stamp duty, offset account setting up fees, Lenders Mortgage Insurance (LMI), and establishment fees, can also be claimed as tax deductions.

Before you claim second mortgage tax deductions, it’s often worth checking with an experienced tax expert.

What is an investment loan?

An investment loan is a home loan that is taken out to purchase a property purely for investment purposes. This means that the purchaser will not be living in the property but will instead rent it out or simply retain it for purposes of capital growth.

Do first-time home loan applicants qualify for tax benefits?

If you’re a first-time homebuyer applying for a home loan, you could qualify for some tax deductions, but only if your property is a source of income for you. For instance, if you rent out the property, you could get tax deductions on the cost of constructing or renovating it, the loss in value of depreciating assets such as furniture or electrical fixtures, and the home loan interest. 

Homeowners using their property as a residence could also get a tax deduction if a part or all of it is used for business. These deductions include tax write-offs for depreciating assets and deductions for operating expenses like utilities’ payments and service charges for phones and the internet. However, people running businesses from their residences don’t qualify for a tax deduction on the interest paid on their home loans.

What is a mortgage rate?

The interest rate on a home loan is sometimes called the mortgage rate. This percentage indicates how much interest the lender will charge you with each home loan repayment. Your interest rate is effectively the “cost” of “buying” the money you’re using to buy a property – the higher your mortgage rate, the more your home loan repayments may cost.

Using a home loan calculator, you can estimate how much your home loan repayments may cost, based on your mortgage rate, loan term, and loan amount. This may also be affected by whether you’re making principal and interest repayments or interest-only repayments, if you have a fixed rate or variable rate mortgage, and any fees and other charges that may apply.

How do you find cheap home loans?

With so many interest rate options and repayment types available, finding the cheapest home loan may depend on the type of loan you choose.

Whether you’re looking for an owner-occupier or investor loan, with interest-only or principal and interest repayments, on a fixed or variable interest rate, the cheapest home loan rate available may vary greatly.

One way to find the cheapest option for you is to narrow down your search and compare the options that best suit your individual requirements. RateCity’s home loan comparison tables can help you get started on your search and take the hassle out of shopping around.

This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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