Investment home loans: rates, interest-only and tax
New variable investment loans averaged 6.40% in August 2026, 0.17 percentage points more than owner-occupier loans, on the RBA's figures, and the cash rate target has since risen to 4.60%. An investment home loan is a loan to buy a property you will rent out rather than live in, and lenders charge investors more for it; interest-only repayments, which investors use more often, can cost more again.
This page explains how lenders price and assess investor loans, the interest-only trade-off, whether to fix, APRA's limit on high debt-to-income lending (which applies separately to investors) and the tax rules, including the negative gearing and capital gains tax changes that apply from 1 July 2027.
By Better Rate Mate Editorial Team ยท Last reviewed
General information only. It doesn't take into account your objectives, financial situation or needs. Check the lender's key facts sheet, credit guide and TMD before you apply. We don't compare every lender, and we may earn a commission if you apply through our links.
Investment loan rates by loan type and LVR
Lenders price investment loans above owner-occupier loans, and the RBA's monthly figures break the averages down by loan type and LVR. On new variable loans, principal and interest loans and new loans at 81% LVR or more, investors pay more on average than owner-occupiers.
| Loan type | Investor | Owner-occupier |
|---|---|---|
| Variable | 6.40% | 6.23% |
| Principal and interest | 6.32% | 6.15% |
| Interest-only | 6.51% | 7.04% |
| Fixed for 3 years or less | 6.46% | 6.26% |
| Fixed for more than 3 years | 7.58% | 6.85% |
| Below 81% LVR | 6.37% | 6.22% |
| 81% LVR or more | 6.77% | 6.33% |
| All outstanding variable loans | 6.47% | 6.24% |
Investor vs owner-occupier rates over the past year
The gap has been steady. On the RBA's figures, new variable investor loans cost between 0.16 and 0.18 percentage points more on average than owner-occupier loans in each month shown from August 2025 to August 2026, while both rose with the cash rate.
| Month | Owner-occupier | Investor | Gap |
|---|---|---|---|
| August 2025 | 5.51% | 5.69% | 0.18 |
| November 2025 | 5.49% | 5.67% | 0.18 |
| February 2026 | 5.73% | 5.91% | 0.18 |
| May 2026 | 6.24% | 6.40% | 0.16 |
| July 2026 | 6.24% | 6.40% | 0.16 |
| August 2026 | 6.23% | 6.40% | 0.17 |
Interest-only or principal and interest?
On an interest-only loan your repayments cover interest only for a set period (for example five years), so the balance doesn't fall. When the period ends the loan switches to principal and interest over the remaining term, and repayments jump. Moneysmart's advice is to work out the higher repayment before you commit and make sure you can afford it.
The table shows the jump at 6.40%, the RBA's August 2026 average for new variable investor loans. On $600,000, interest-only costs $3,200 a month; after five years it becomes about $4,014 a month to repay the loan over the remaining 25 years, against $3,753 if you had paid principal and interest from day one. Some lenders cap interest-only by LVR: CommBank, for example, only offers investment interest-only below 90% LVR.
To run your own numbers, open the mortgage calculator with a five-year interest-only period at the investor interest-only average.
| Loan | Interest-only (years 1 to 5) | Principal and interest after that (25 years) | Principal and interest from day one (30 years) |
|---|---|---|---|
| $400,000 | $2,133 | $2,676 | $2,502 |
| $600,000 | $3,200 | $4,014 | $3,753 |
| $800,000 | $4,267 | $5,352 | $5,004 |
Fixed, variable or split for an investment loan?
It comes down to cash flow certainty against flexibility. A fixed rate makes your repayments, and so your net rental cash flow, predictable for the term; on the RBA's August 2026 averages, new investor loans fixed for three years or less cost 6.46% and longer fixes 7.58%, against 6.40% variable. A variable rate keeps extra repayments, redraw and offset available and benefits from any rate cuts, but a rise flows straight into your cash flow.
A split loan fixes part of the balance and leaves the rest variable. Check each lender's rules for investors before you choose: ING, for example, doesn't offer fixed rates to investors with less than a 20% deposit. See fixed vs variable home loans for break costs and extra repayment limits.
How lenders assess investors
Lenders test serviceability at the loan rate plus APRA's 3 percentage point buffer, counting your existing debts, including other investment loans, and the expected rent; APRA's guidance expects banks to count no more than 80% of expected rent. Lenders also set a maximum LVR for investment loans, and some cap interest-only loans by LVR.
APRA's debt-to-income limit and investors
Since 1 February 2026 APRA has limited each bank's new lending at a debt-to-income ratio of six or more to 20% of its new mortgage lending, applied separately to owner-occupier and investor lending. It isn't a cap on any one borrower, but a bank near its investor limit may be less willing to lend at a high DTI. APRA said the limit would bite on investors first, because they typically borrow at higher DTI ratios.
APRA's June quarter 2026 figures show investors took 35.6% of new bank home lending, and 8.9% of new investor loans had a DTI of six or more, compared with 3.7% of new owner-occupier loans. Your DTI is your total debt divided by your gross annual income; our borrowing power calculator shows yours.
Deposit and LVR for investment loans
Lenders price investor loans by LVR as well as purpose: in August 2026 new investor loans at 81% LVR or more averaged 6.77%, against 6.37% below 81% (RBA). Borrowing more than 80% of the value usually means paying lenders mortgage insurance, which the ATO treats as a borrowing expense on a rental property, claimed over five years or the loan term if shorter.
The 5% Deposit Scheme and Help to Buy are for homes you live in, so they don't help with an investment property. Our LMI calculator works out your LVR and the deposit you need to avoid LMI.
Investment loan features at the lenders we review
Offset accounts, split loans and package fees matter more on an investment loan, because they change how you track interest for tax as well as what you pay. The table shows what each lender we review offers on its loans.
| Lender | Offset account | Split loans | Package or annual fee |
|---|---|---|---|
| CommBank | Yes on variable loans: one on Digi, up to two on Simple, multiple on Standard Variable, with no offset feature fee on Digi or Simple. None on fixed. | Yes on Standard Variable and Fixed. Not on Simple. | Wealth Package, $395 a year, $150,000 minimum package lending |
| Westpac | Up to 10 full offset accounts on Rocket Repay | Yes, fixed and variable | Premier Advantage Package, $395 a year, loans over $150,000 |
| ANZ | ANZ One offset on Standard Variable, $10 a month | Yes, any fixed/variable ratio | None: ANZ says no home loan package, set-up or ongoing fees on new loans |
| NAB | Up to 10 on the Tailored variable loan | Yes, fixed and variable | Choice Package closed to new customers on 18 August 2023 |
| ubank | Not listed | Not listed | $0 on Neat |
| St.George | Full offset on the Standard Variable Rate loan; none on Basic | Yes, fix all or part of the loan | Advantage Package, $395 a year |
| Bankwest | Simple: optional 100% offsets at $10 a month each. Complete: up to nine with no monthly fee. Fixed: optional 40% offset | Not listed | Complete package, $395 a year |
| ING | 100% offset on Orange Advantage via Orange Everyday | Yes (Orange Advantage split discount for owner-occupiers) | $0 on Mortgage Simplifier; $299 on Orange Advantage |
| Macquarie | Up to 10 on the Offset Home Loan | Yes, no fee (up to 6 loan accounts on Basic) | $0 Basic; $248 Offset |
| Suncorp | Optional 100% offset on variable loans, not during a fixed term | Yes, minimum $10,000 per split; not during a fixed term | Home Package Plus, $375 a year |
| BOQ | 100% offset on Clear Path (personal names only) | Yes, fixed and variable | Not listed |
| ME Bank | 100% offset on CompleteME, up to 10 SpendME accounts (variable) | CompleteME: variable, fixed or a mix | $0 EconoME; $395 CompleteME |
| Bendigo Bank | 100% offset on fixed and variable (Flex, Complete); up to 6 per loan | Not listed | Not listed |
| Athena | Fee-free 100% offset on Power Up | Yes, on Power Up | Not listed |
| Unloan | No | Not listed | Not listed |
Refinancing an investment loan
Investors refinance for the same reasons as owner-occupiers (a lower rate, a better structure or a fixed term ending) and face the same costs and the same serviceability test, with the expected rent counted at a discount. Refinancing to release equity for another purchase keeps the interest deductible only on the part used for income-producing purposes, so keep investment and private borrowing in separate loans or splits.
Our refinance calculator works out the saving and break-even point, and the refinancing guide covers the costs and steps.
Stamp duty for investors
Investors pay the general rate of stamp duty: owner-occupier and first home buyer concessions don't apply to a property you'll rent out. The table shows the duty on a $700,000 established investment property in each state.
Budget for insurance too. Home insurance is written for a home you live in, so a rented property needs its own cover: see landlord insurance for an investment property.
| State or territory | Investor stamp duty | Work it out |
|---|---|---|
| New South Wales | $25,687 | NSW stamp duty calculator |
| Victoria | $37,070 | VIC stamp duty calculator |
| Queensland | $24,525 | QLD stamp duty calculator |
| Western Australia | $27,265 | WA stamp duty calculator |
| South Australia | $32,330 | SA stamp duty calculator |
| Tasmania | $26,748 | TAS stamp duty calculator |
| Australian Capital Territory | $20,040 | ACT stamp duty calculator |
| Northern Territory | $34,650 | NT stamp duty calculator |
What you can claim on tax
Interest on a loan used to buy a rental property is generally deductible while the property is rented or available for rent. What matters is how the borrowed money is used, not what secures the loan: the ATO's example is a couple who borrow against their rental to buy a new home, and can't claim that interest because the new home doesn't produce income.
If part of a loan is used for private purposes (a car, a holiday, redraw for personal spending), you must apportion the interest and can only claim the rental share. Borrowing expenses, including lenders mortgage insurance and loan establishment fees, are claimed over five years or the loan term if shorter; if they total $100 or less you can claim them in the year you incur them. Get advice from a registered tax agent for your situation.
Negative gearing and capital gains tax changes from 1 July 2027
Tax rules for residential investment property change from 1 July 2027. The ATO says changes announced in the 2026-27 Federal Budget and now law will, from 1 July 2027, limit negative gearing for residential property investments to new builds, and replace the 50% capital gains tax discount for individuals, trusts and partnerships with cost base indexation and a 30% minimum tax rate on capital gains.
Properties held at 7:30pm AEST on 12 May 2026 are exempt from the negative gearing change, and the capital gains changes apply only to gains that accrue after 1 July 2027. If you're buying an established investment property now, ask a registered tax agent how the changes affect your numbers before you commit.
Using equity to buy an investment property
Many investors borrow against the equity in their home for the deposit. Keeping the investment borrowing in a separate loan (or split) from your home loan makes the interest easier to track for tax. Lenders differ on which investors they suit: Athena, for example, offers loans to companies and trusts that take future rental income into account, while ING doesn't offer fixed rates to investors with less than a 20% deposit.
General information only. It doesn't take into account your objectives, financial situation or needs. Check the lender's key facts sheet, credit guide and TMD before you apply. We don't compare every lender, and we may earn a commission if you apply through our links.
What to watch for
- The repayment jump when an interest-only period ends.
- Mixing private and investment borrowing in one loan, which complicates the interest deduction.
- Redrawing from an investment loan for personal spending: the ATO treats the redrawn amount as private borrowing.
- Your total debt-to-income ratio. Lenders now have a limited allocation for DTI of six or more.
- Rate loadings for investor loans above 80% LVR (the RBA's August 2026 average was 6.77% at 81% LVR or more).
Common questions
What is the current interest rate on an investment loan?
The RBA's average rate on new variable investor loans was 6.40% in August 2026 (published 8 October 2026). Your rate depends on the lender, your LVR and whether you choose interest-only. Get each lender's key facts sheet for your loan amount.
What is Australia's interest rate today?
The RBA cash rate target is 4.60% from 30 September 2026; new variable investor loans averaged 6.40% and owner-occupier loans 6.23% in August 2026, on the RBA's figures.
Why are investment loan rates higher?
Lenders price investor lending above owner-occupier lending. In August 2026 new investor variable loans averaged 6.40% against 6.23% for owner-occupiers.
Is interest on an investment loan tax deductible?
Generally yes, for the portion of the loan used to buy or maintain a property that is rented or available for rent. Interest on any part used for private purposes isn't deductible.
Is lenders mortgage insurance tax deductible for investors?
The ATO treats LMI on a rental property loan as a borrowing expense, claimed over five years or the loan term if shorter (or immediately if total borrowing expenses are $100 or less).
Is it good to take a loan for investment?
It depends on whether you can carry the costs. An investment loan can work if the rent covers enough of the repayments and you could absorb vacancies and rate rises; it is riskier if you are relying on the property's value rising. From 1 July 2027 negative gearing for residential property is limited to new builds, unless you held the property at 7:30pm AEST on 12 May 2026 (ATO). This is general information, not advice.
What are the negative gearing changes?
From 1 July 2027, negative gearing for residential property investments is limited to new builds, and the 50% capital gains tax discount is replaced with cost base indexation and a 30% minimum tax rate on capital gains. Properties held at 7:30pm AEST on 12 May 2026 are exempt from the negative gearing change (ATO).
What is the monthly interest on $1,000,000?
At 6.40% a year, interest on $1,000,000 is about $5,333 a month. Principal and interest repayments over 30 years at that rate would be higher, because they also repay the loan.
About rates on this page
We don't quote lenders' interest rates: they change daily and with every RBA decision, and we don't have a live rate feed. The averages we quote are the RBA's published figures for the month shown. Always get the lender's key facts sheet, which shows the rate and comparison rate for your loan amount.