Property Investor Guide
Property investment needs different loan structures and a clear view of tax. Lenders charge investors more: in August 2026 the RBA's average rate on new variable investor loans was 6.40%, against 6.23% for owner-occupiers. The way you structure the loan affects your cash flow and what you can claim.
By Better Rate Mate Editorial Team · Last reviewed
1Key financial priorities
Understand investor vs owner-occupier rates
Lenders price investment loans above owner-occupier loans, and the gap varies by lender. On the RBA's figures, new variable investor loans cost 0.16 to 0.18 percentage points more on average than owner-occupier loans in each month shown in our investment home loans guide, from August 2025 to August 2026.
Decide between principal and interest and interest-only
Interest-only lowers your repayments for a set period, but the balance doesn't fall and the rate is usually higher: in August 2026 the RBA's average was 6.51% for new investor interest-only loans, against 6.32% for principal and interest. When the interest-only period ends, repayments jump.
Keep investment and personal borrowing separate
The ATO looks at what borrowed money is used for, not what secures it. Keep investment borrowing in its own loan or split, and don't redraw from it for personal spending, so the interest stays deductible. Get advice from a registered tax agent for your situation.
Plan for vacancies and rate rises
Test your cash flow at your loan rate plus 3 percentage points, the buffer APRA expects banks to use when they assess you, and with the property empty for a few weeks a year.
2Loan types to consider at this stage
Interest-only investment loan
Lower repayments for a periodRepayments cover interest only, so the balance doesn't fall, and rates are usually higher than principal and interest. Lenders limit how long you can stay interest-only: CommBank, for example, allows up to 15 years in total over the life of an investment loan.
Principal and interest investor loan
Builds equityUsually a lower rate than interest-only, and every repayment reduces the loan.
Line of credit
Use with cautionLets you draw against your equity, for example for a deposit on another property. It takes discipline to stop the debt growing unchecked.
3Insurance needs at this stage
- ✓Landlord insurance covering loss of rent, damage by tenants and legal liability
- ✓Building insurance at replacement value, not market value
- ✓Income protection insurance to cover your own income if you can't work
- ✓Life insurance sized to cover your total debts, including the investment loans
4Common mistakes to avoid
- ✗Choosing interest-only without modelling the repayment jump when it ends
- ✗Mixing private and investment borrowing in one loan, which complicates the interest deduction
- ✗Underestimating property management, maintenance and vacancy costs
- ✗Borrowing so much that one vacancy or rate rise causes financial stress
- ✗Buying close to home out of familiarity instead of researching the market
5Tips for getting a better rate
- 1Compare investor loans from a range of lenders, not just the big four
- 2Ask for the rate at your LVR: investor pricing rises above 80% (the RBA's August 2026 average for new investor loans at 81% LVR or more was 6.77%)
- 3Review your rate every year or two, since lenders reprice to attract new customers
- 4Consider fixing part of the loan if a rate rise would strain your cash flow
Common questions
Are investment loan rates higher than owner-occupier rates?
Yes, on average. In August 2026 the RBA's average rate on new variable investor loans was 6.40%, against 6.23% for owner-occupiers.
Is interest on an investment loan tax deductible?
Generally yes, for the part 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. 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).
How long can an investment loan be interest-only?
Each lender sets its own limit. CommBank, for example, allows up to 15 years of interest-only in total over the life of an investment loan, and 5 years for an owner-occupied loan.
