Investment property loans in Australia

Most lenders require 10 to 20% for investment lending, and the most competitive rates apply at 20% or more (80% LVR or below). Many investors use equity in an existing property instead of cash. Usable equity is typically 80% of the home's value minus the amount owing.

Gross yields on houses in the capital cities have historically ranged around 3 to 5%, with units and regional properties often higher. High yield and high growth are rarely found in the same postcode. The appropriate balance depends on whether the main constraint is cash flow or time in the market.

If deductible costs (loan interest, management, maintenance, depreciation) exceed the rent received, the property makes a tax loss. Under changes announced in the 2026-27 Budget, from 1 July 2027 that loss can be offset against other income only for new builds and for properties held before 7:30pm AEST on 12 May 2026. For established properties bought after that time, the loss is carried forward against future residential property income and gains. A registered tax agent can confirm how the rules apply.

Yes, typically by around 0.2 to 0.6%, and interest-only lending adds a further margin. Regulators require banks to hold more capital against investor lending. For the same reason, investment loans are the segment in which a broker most often obtains a rate below the advertised rate.

Yes, and it is often the simplest way to begin investing. The existing loan can usually be converted to investment purposes, the interest becomes deductible, and the equity helps fund the next purchase. It is advisable to obtain tax advice on the structure before moving rather than afterwards.