Investment Property Loan Interest Rates

20 December 2021

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Investment property loan interest rates are usually higher than owner-occupier home loan rates. It’s crucial to find a great interest rate to maximise your return on investment (ROI).

Read on to find out everything you need to know about investment property loan interest rates in Australia.

Why are investment property interest rates higher?

Investment property loans tend to be viewed by lenders as being slightly more risky than owner-occupier home loans. That’s why they usually charge a slightly higher interest rate.

If you’re relying on tenant income to help you make your investment property loan repayments, lenders will usually only factor in about 75% of your tenant income when assessing your application. This takes into account that there could be times when you don’t have tenants renting your investment property.

The investment property loan application process

Applying for an investment property loan is similar to applying for a home loan. You need to demonstrate to the lender that you can afford your regular repayments.

Your regular repayments will depend on:

  • how much you borrow.

Obviously, the more you borrow, the higher your repayments will be (and vice versa).

  • the type of loan you take out

If you take out a principal and interest loan, your repayments will be higher than if you take out an interest only loan.

  • the loan term.

Investment property loan terms can range from 10 to 30 years. The longer the term, the lower your repayments will be (and vice versa).

  • the comparison interest rate.

The comparison interest rate is the interest rate plus any lender fees. The lower the comparison rate, the lower your repayments will be (and vice versa).

  • your repayment frequency.

Standard investment property loan repayments are monthly, but you can arrange weekly or fortnightly repayments if you prefer. It can be a good budgeting idea to align your repayments with the frequency of your tenant rent payments.

You can use our loan repayment calculator to give you an idea of what your investment property loan repayments are likely to be for different loan amounts, terms, interest rates and repayment frequencies.

You can also use our borrowing power calculator to work out how much you may be able to borrow based on the repayments you can afford.

Costs of buying an investment property

When you’re looking to arrange your investment property finance, it’s important to factor in all your buying costs, including:

How we can help

If you’re looking to buy an investment property and you need finance, our licensed and experienced brokers at Wisebuy Investment Group can help. We can also help you with your loan application.

We service a diverse range of clients in the popular Newcastle, Lake Macquarie and Maitland areas. Our experienced mortgage brokers work with more than 60 lenders in the Australian market.

Contact us today for an obligation-free chat to find out more about investment property loans. We’d be happy to answer any questions you have.