Guide: Investment Property Loans
Investment and interest-only loans for property investors in Australia, reviewed in 2026. Compare rates, negative gearing implications and lender policies for investment mortgages against owner-occupier home loans.
Investment property loans are usually priced slightly higher than owner-occupier home loans because APRA treats investment lending as higher risk from a system-wide stability perspective, and lenders apply stricter serviceability tests, often "shading" (discounting) expected rental income when assessing your borrowing capacity. Interest-only terms (commonly 1-5 years) are available on many investment loans, which can improve short-term cash flow but mean the principal is not reduced during that period.
Negative gearing — where the costs of holding the investment property (interest, fees, depreciation) exceed the rental income — can be used to offset other taxable income under current tax law, but this is a tax outcome, not a lending feature, and you should seek advice from a registered tax agent rather than relying on a lender's general commentary.
Eligibility mirrors a standard home loan — 18+, Australian citizen, permanent resident or eligible visa holder, acceptable credit history and serviceable income — but lenders will also assess your existing portfolio of properties and debts, and may apply tighter loan-to-value ratio (LVR) limits for investment lending, commonly requiring a larger deposit than for an owner-occupied purchase.
When comparing investment loans, look at the comparison rate, whether interest-only or principal-and-interest suits your strategy, offset account availability, and whether the lender allows cross-collateralisation (using the equity in one property to help secure another) — a flexible structure can matter more for investors building a portfolio than the headline rate alone.
Investment property loans finance a property bought to earn rental income or capital growth rather than to live in, and lenders generally price and assess them differently from an owner-occupier home loan. APRA has at times directed banks to hold more capital against investment lending and to apply tighter serviceability buffers, which is one reason investor rates often sit above owner-occupier rates for an otherwise identical borrower.
Interest-only terms (commonly 1–5 years) are more widely available on investment loans than on owner-occupier loans, since many investors prioritise cash flow and rely on the property's capital growth or an eventual sale; negative gearing — where the loan interest and other deductible costs exceed the rental income — can reduce taxable income, but this is a tax outcome that depends on individual circumstances and should be checked with a registered tax agent, not assumed from a loan product alone.
Maximum LVR on investment loans is typically lower than on owner-occupier loans, and Lenders Mortgage Insurance applies above the lender's LVR threshold just as it does for owner-occupiers. Lenders will usually count a discounted percentage of expected rental income (commonly 70–80%) toward serviceability, not the full amount, when assessing your borrowing capacity.