Home loans for property investors
Investment home loan features
As an investor you’re probably looking for the lowest interest rate you can get. The interest rate on an investment loan is typically higher than on an owner-occupier (OO) home loan but by choosing the right home loan features you can still find a good deal.
Interest Only (IO)
With an interest only (IO) loan your repayments only cover the interest set for the term of the loan—the principal remains untouched. Traditionally this has meant lower repayments which can be claimed back as a tax deduction, freeing up funds for you to pay off your OO home loan. However, interest rates on IO loans are higher than principal and interest (P & I) and an IO loan may not be the best choice for you.
Principal & Interest (P&I)
The interest rate on P & I loans for investors is higher than it is for owner-occupiers, but lower than IO investment loans. With a P & I loan you start reducing the principal immediately. While your repayments may be higher with a P & I loan, you are paying off the principal and ultimately saving on interest repayments.
Line of Credit
A Line of credit loan, gives you access to the equity in your property. You can draw, pay back and redraw the funds as many times as you like for various purposes. It can help you counter any shortfalls in rental payments over the term of your investment as well as give you access to funds to purchase your next property investment. Just remember to keep track of the funds you withdraw so you stay on top of the tax deductibility of your interest repayments.
How much can you borrow?
Use our borrowing calculator for an estimate of your borrowing capacity or contact one of our lending specialists to discuss your situation.