Investment Property Loans from 6.29% p.a.

Why Invest in Property with an Investment Loan?

Property investment remains one of the most popular wealth-building strategies in Australia. With the right loan structure, you can leverage borrowed funds to build a portfolio that generates rental income and capital growth while claiming significant tax deductions along the way.

Unlike owner-occupied loans, investment property lending is designed around cash flow optimisation and tax efficiency. Interest-only repayments keep your outgoings low during the holding period, while the interest expense itself is fully tax-deductible. This makes property investment accessible even to those who might not have large surplus cash each month.

At Your Finance Guide, we specialise in structuring investment loans that align with your portfolio strategy. Whether you are purchasing your first investment property or adding your tenth, we compare rates across 50+ lenders to ensure you get the most competitive deal with the right features.

Interest-Only vs Principal and Interest

One of the most important decisions for property investors is choosing between interest-only and principal and interest repayments. Each option has distinct advantages depending on your investment strategy and financial position.

Interest-only repayments mean you only pay the interest on the loan each month, without reducing the principal balance. On a $600,000 loan at 6.29%, your monthly repayment would be approximately $3,145 on interest-only, compared to around $3,714 on principal and interest over 30 years. That saving of $569 per month can be redirected to other investments, used to pay down non-deductible debt on your home, or held as a buffer.

The key tax advantage is that the entire interest amount remains deductible throughout the interest-only period. With principal and interest, the deductible portion shrinks over time as the balance reduces. Most lenders offer interest-only periods of 1-5 years, with the option to extend subject to reassessment.

Principal and interest repayments build equity faster and reduce the total interest paid over the life of the loan. This approach suits investors with strong cash flow who want to pay down debt and eventually own the property outright for maximum rental yield.

Negative Gearing and Tax Deductions

Negative gearing is a powerful tax strategy that allows property investors to offset losses from their investment property against other income. A property is negatively geared when the total expenses of ownership exceed the rental income received.

Common tax-deductible expenses on an investment property include mortgage interest, property management fees, council and water rates, insurance premiums, repairs and maintenance, depreciation on the building and fixtures, and travel to inspect the property. For a typical investment property, these deductions can reduce your taxable income by $10,000-$30,000 per year.

It is important to understand that negative gearing is not a profit in itself — it is a strategy that works best when the property is also appreciating in value. The tax deductions reduce the holding cost of the property while you benefit from long-term capital growth. When you eventually sell, you will pay capital gains tax, but if you have held the property for more than 12 months, you receive a 50% CGT discount.

LVR Requirements and Portfolio Lending

Loan-to-Value Ratio (LVR) requirements for investment properties are slightly stricter than for owner-occupied purchases. Most mainstream lenders allow up to 80% LVR without Lenders Mortgage Insurance, and up to 90% with LMI. Some specialist lenders will go up to 95% LVR for investors with strong serviceability.

For borrowers building a portfolio of multiple properties, portfolio lending becomes an important consideration. Traditional lenders may restrict the number of investment loans they will approve, or apply increasingly conservative serviceability assessments for each additional property. Portfolio lenders and non-bank lenders are often more flexible, assessing your entire portfolio holistically rather than each property in isolation.

Cross-collateralisation — where multiple properties are used as security for a single loan — is another option that can simplify lending but comes with risks. We generally recommend standalone securities for each property to maintain flexibility and reduce risk if property values change.

Using Equity to Buy Your Next Investment Property

If you already own a home or other investment properties, the equity you have built can serve as a deposit for your next purchase. Available equity is the difference between your property value and your current loan balance, typically up to 80% of the value.

For example, if your home is worth $800,000 and you owe $400,000, your available equity is ($800,000 x 80%) - $400,000 = $240,000. This could serve as a 20% deposit on a $1,200,000 investment property. We can arrange a top-up on your existing mortgage or a separate line of credit to access this equity, keeping the investment portion separate for clean tax deductions.