Investing in property is considered one of the safest ways to expand and diversify your wealth. Its share of the overall new home loan market reached new heights in the March 2026 quarter at more than two out of five mortgages, so it’s clear that there’s a huge appetite for property investment in Australia.
Of course, finding the right home loan product to match your investment goal is essential, especially with the myriad tax changes expected to roll out over the next 12 months or so. It's worth understanding exactly how these loans work and what to look for when comparing your options.
Investment loan rates
Investment loan rates work in much the same way as owner-occupier rates, but they’ve tracked consistently above owner-occupier loan rates over time, according to the RBA. This is because lenders view investment lending as riskier than lending to someone buying a home to live in. A few key reasons for this include:
- Rental income isn't guaranteed, meaning an investor's ability to service the loan can be more variable than that of a salaried owner-occupier.
- Fluctuating interest rates, demand in your investment’s location and other market conditions provide greater uncertainty than owner-occupier loans.
- The costs associated with maintaining an investment property could mean that you’re running at a loss.
How much does your rate affect your repayments?
Even a small difference in interest rate can have a significant impact over the life of a mortgage. The table below shows how total repayments vary across a range of rates on a $600,000 investment loan over 30 years:
| Interest rate | Monthly repayments | Total interest paid |
|---|---|---|
| 6.00% p.a. | $3,597 | $695,029 |
| 6.25% p.a. | $3,694 | $729,949 |
| 6.50% p.a. | $3,792 | $765,267 |
| 6.75% p.a. | $3,892 | $800,972 |
| 7.00% p.a. | $3,992 | $837,053 |
| Figures are based on a $600,000 loan over a 30-year principal and interest term. Rates are illustrative only and will vary by lender and borrower profile. | ||
It’s worth noting that while interest is a claimable expense for most investment home loans, paying more each month will impact your immediate cashflow.
How much do I need as a deposit for an investment loan?
Most lenders require a minimum deposit of between 10% and 20% for an investment loan, depending on their lending criteria. This is in contrast to owner-occupier loans, where you can be approved with a deposit as small as 5%. Borrowing above 80% LVR is possible, but you'll typically need to pay lenders mortgage insurance (LMI) on top of your borrowing costs.
Some lenders apply stricter deposit requirements for certain property types, such as apartments in high-density areas or properties in regional locations. As with owner-occupier loans, the larger your deposit, the more competitive the interest rate you're likely to be offered.
Types of investment home loans
Established home loans
An investment loan for an established build works in much the same way as an owner-occupier home loan. You’ll borrow a set amount to purchase a property that’s already been built and repay it over a term of up to 30 years. Most lenders offer both variable and fixed rate options.
Construction loans
A construction investment loan is designed for investors who want to build a new property rather than purchase an existing one. Funds are released in stages as construction progresses, and you'll only pay interest on the amount drawn down at each stage.
These loans are all the more relevant in light of the upcoming negative gearing reforms, as newly built properties will remain eligible for negative gearing after 1 July 2027.
Apartment loans
Apartment loans follow the same basic structure as standard investment loans, but lenders tend to apply stricter conditions. In high-density areas or buildings with a large proportion of investor-owned units, lenders may require a larger deposit to account for the greater risk of fluctuating property values.
Interest-only investment loans
Interest-only loans allow you to repay just the interest portion of your loan for a set period, typically up to five years, before reverting to principal and interest repayments. Investors favour them because they keep monthly repayments lower and maximise the portion of your payment that can be claimed as a tax deduction. However, because you aren’t reducing the principal during the interest-only period, you'll pay more interest over the life of the loan.
SMSF loans
An SMSF loan allows the trustees of a self-managed super fund to borrow money to purchase an investment property held within the fund. These loans are structured differently to standard investment loans and come with strict regulatory requirements set by the ATO, so it's important to seek professional financial advice before pursuing this option.
Investment properties in Australia: 2025
Demand for investment property in Australia remains strong heading into 2026. According to the Australian Bureau of Statistics (ABS), the total number of new investor loan commitments grew 18.8% between the March 2025 and March 2026 quarters, outpacing owner-occupier loan growth of just 2.5% over the same period. Investor loans accounted for 41.0% of all new dwelling loan commitments in the March 2026 quarter, their highest market share in over six years of available ABS data.
Returns on investment properties are also at their strongest in years. A PropTrack-Westpac report found that 93% of investor resales in the final months of 2025 returned a profit to their vendors, the highest level in at least a decade.
Looking ahead, residential property valuers are paying close attention to a range of factors that could influence prices over the coming months. According to the Australian Property Institute's Q1 2026 market outlook, construction costs and the interest rate outlook are the two most widely cited drivers of residential property prices, with 66% and 63% of valuers, respectively, nominating them as key factors for the next three months.
Investment loan tax benefits
One of the key advantages of investing in property is the range of expenses you can claim as tax deductions, which can help offset the cost of owning and managing your investment. Here's what you can and can't claim:
What you can claim
- Interest on your investment loan
- Property management and agent fees
- Council rates and land tax
- Building and landlord insurance
- Repairs and maintenance to the property
- Depreciation on assets within the property
- Borrowing expenses, such as loan establishment fees, for five years or spread over the loan term (whichever is shorter)
- Body corporate fees and charges
- Pest control and cleaning costs
What you can't claim
- The purchase price of the property or any capital improvements
- Stamp duty and other acquisition costs (though these may affect your CGT calculation when you sell)
- Expenses related to periods when the property was not available for rent
- Costs that are of a personal nature, such as any private use of the property or travel to inspect it
- Loan principal repayments
Negative gearing and capital gains tax changes: 2026
The Australian Government announced significant reforms to negative gearing and capital gains tax as part of the 2026-27 Federal Budget. Changes are set to take effect from 1 July 2027, if passed, that will have meaningful implications for property investors.
Negative gearing changes
Negative gearing is a system that allows investors to offset the net loss on their property against their taxable income. However, from 1 July 2027, negative gearing for residential property investments will be limited to new builds only. This means that if your investment property is a pre-existing build and runs at a loss, you'll no longer be able to offset that loss against your salary.
Properties held at the time of announcement (7:30pm AEST, 12 May 2026) are fully exempt and can continue to be negatively geared. Properties purchased between the announcement date and 30 June 2027 may be negatively geared during that period, but not from 1 July 2027 onwards.
For investors who purchase an existing property after the announcement, any rental losses will be carried forward to offset future residential property income rather than being lost entirely.
Capital gains tax changes
Capital gains tax (CGT) is a tax investors have to pay on the profit made on the sale of their property. For those who have owned the asset for at least 12 months, a 50% CGT discount currently applies.
However, from 1 July 2027, this discount will be replaced with cost base indexation and a 30% minimum tax rate on capital gains. Investors who purchased properties before 1 July 2027 won't be taxed retrospectively; the 50% discount will still apply to gains made up to that date.
Investors who purchase new builds will have the option of choosing either the 50% CGT discount or the new indexation arrangements when they sell, giving them greater flexibility depending on their returns.
How to apply for an investment home loan with Savvy
-
Apply online
Fill out our online form with all the necessary details about your investment budget and financial situation.
-
Submit your documents
Supply your broker with the required documentation, including bank statements and info on existing assets.
-
Have a chat
Talk with your broker about your situation so they can find the best available loan for your needs.
-
Get pre-approval
Pre-approval gives you a clear borrowing limit so you can search for properties with confidence.
-
Secure your investment property
Once you've found the right property, lock in your purchase and move forward with your investment.
-
Formal application and approval
Your broker will guide you through the formal application process, working with your lender to secure full approval.
-
Settlement
Once everything's signed off, you'll officially be an investment property owner!
Top tips for buying an investment property
-
Consider redraw facilities vs offset accounts
Many investment loans will have a redraw facility, offset account or both. While redraw facilities may muddy the water when it comes to usage for tax purposes, offset accounts make it easier to keep the purpose of the loan consistent while allowing access to your funds.
-
Think about how much equity you’re using
If you’re drawing on equity from another property to purchase your investment, think carefully about how much you need to borrow. Weigh up the benefits of investing against the main drawback of expanding your home loan debt and putting another property at the mercy of the market.
-
Run a fine-tooth comb through your finances
The big question you need to ask yourself before diving into your application is whether an investment property purchase works for your current financial situation. It’s important not to overburden yourself with debt and avoid complicating your tax profile too much if you aren’t in a position to manage it.
