In a tight rental market, investor home loans could be the buyer’s way in

By Evlin DuBose · · 2 min read
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Excited investor leaping into the property market

Look, it’s no secret that renters are doing it tough. The average rent in Australia has catapulted to just shy of $600 a week. (In cities like Sydney, it’s more like $750). 

Sky-high rental values can make it tough to save for crucial home loan costs like that first deposit, especially when steep interest rates have already raised the affordability floor. 

National vacancies also dropped to just 1.1% in January 2024, according to SQM Research. So not only is renting colossally expensive in Australia’s capital cities, but there’s nowhere to rent.

However, there could be a hidden opportunity. While first home buyer grants can help Australians get on the property ladder, your first property doesn’t need to be your first home. In a tight rental market, the property investor is king.

Easter property selling season sees more opportunities for investors

Excited property investor looking at investment house

Generally speaking, more properties have gone up for sale in the last year than during the 2022 housing downturn. 

More properties mean more opportunities for investors, and with rents rising, the potential rental income and tax breaks are a huge draw for landlords. 

“The return landlords are getting on their investment is improving,” explains Mozo property expert Peter Marshall. 

“There are just more opportunities for investors right now.”

Easter selling season is coming up, too – autumn and spring tend to be Australia’s busiest property moments. 

But despite this increase in investor opportunities, rentvesting is still a relatively small part of the property market. Could future home buyers be missing out?

Marshall points to the Bank of Mum & Dad and first home buyer grants as common ways to get home-buying assistance. However, investing in property and generating considerable home equity to borrow against later is an underrated way into the housing market. 

“Buyers may have maxed out the inner cities, but remote work means Australians no longer have to live in the city,” explains Marshall. 

“Home buyers can look further afield to where things are more affordable. And out there, they can get an investment property, rent it out, and generate income to pay the investor home loan.

“It’s a way of putting your nest egg into the property market and building up wealth to use later. Then, when it comes time to buy your dream home, you have equity or capital gains to help you make that purchase.”

Investing isn’t foolproof. You’re still liable for capital gains tax, mortgage repayments, and landlord maintenance costs like repairs. 

Investment home loan interest rates also tend to be higher than owner-occupied rates, since mortgage lenders see investors as financially risky.

However, property affordability ultimately boils down to purchase price, and there are still plenty of suburbs in Australia where you can buy houses for under $300,000. Any of these could be a future opportunity for a home buyer – and a future home for a renter. 

Compare investment home loans in the table below.

Home loan comparisons on Mozo

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Last updated 27 July 2024 Important disclosures and comparison rate warning*

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  • Basic Home Loan

    • Investment
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.34 % p.a.
    Variable
    Comparison rate
    6.36 % p.a.
    Initial monthly repayment
    $3,108
    Go to site

    No annual or application fees. Competitive rate tiers based on your LVR as well as interest only and split repayment options. Fast application and turnaround process. Secure online application.

  • Neat Home Loan

    • Investor
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.24 % p.a.
    Variable
    Comparison rate
    6.26 % p.a.
    Initial monthly repayment
    $3,075
    Go to site

  • Unloan Variable

    • Investment
    • LVR <80%
    Interest rate
    6.29 % p.a.
    Variable
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,092
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Neat Home Loan

    • Investor
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.24 % p.a.
    Variable
    Comparison rate
    6.26 % p.a.
    Initial monthly repayment
    $3,075
    Go to site

  • Unloan Variable

    • Investment
    • LVR <80%
    Interest rate
    6.29 % p.a.
    Variable
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,092
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Special Real Deal Home Loan

    • LVR<80%
    • Investment
    • Principal & Interest
    Interest rate
    6.29 % p.a.
    Variable
    Comparison rate
    6.34 % p.a.
    Initial monthly repayment
    $3,092
    Go to site

    Investors enjoy no monthly or annual fees to pay. Flexibility to choose your repayment schedule (weekly, fortnightly or monthly). Make regular additional repayments and extra lump sum payments. Split your home loan into multiple loan accounts.

  • Flex Home Loan

    • Investor
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.29 % p.a.
    Variable
    Comparison rate
    6.53 % p.a.
    Initial monthly repayment
    $3,092
    Go to site

  • Flex Home Loan

    • Fixed
    • Investor
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.29 % p.a.
    Fixed 3 years
    Comparison rate
    6.53 % p.a.
    Initial monthly repayment
    $3,092
    Go to site

  • Basic Home Loan

    • Investment
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.34 % p.a.
    Variable
    Comparison rate
    6.36 % p.a.
    Initial monthly repayment
    $3,108
    Go to site

    No annual or application fees. Competitive rate tiers based on your LVR as well as interest only and split repayment options. Fast application and turnaround process. Secure online application.

  • Offset Home Loan

    • Investment
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.34 % p.a.
    Variable
    Comparison rate
    6.59 % p.a.
    Initial monthly repayment
    $3,108
    Go to site

    Up to 10 offsets. Competitive rate tiers and interest only repayment option. No application fee. Split loan option. Fast, secure online application. $248 annual fee.

  • Basic Home Loan

    • Fixed
    • Investment
    • Principal & Interest
    • LVR <70%
    Interest rate
    6.55 % p.a.
    Fixed 3 years
    Comparison rate
    6.42 % p.a.
    Initial monthly repayment
    $3,177
    Go to site

    Lock in repayments from 1 to 5 years. Competitive rate tiers depending on your LVR. No application or annual fee. Fast, secure online application.

  • Offset Home Loan

    • Fixed
    • Investment
    • Principal & Interest
    • LVR <70%
    Interest rate
    6.55 % p.a.
    Fixed 3 years
    Comparison rate
    6.65 % p.a.
    Initial monthly repayment
    $3,177
    Go to site

  • SMSF Home Loan

    • LVR <70%
    Interest rate
    6.99 % p.a.
    Variable
    Comparison rate
    7.00 % p.a.
    Initial monthly repayment
    $3,323
    Go to site

    Enjoy a competitive rate on your SMSF home loan with Loans.com.au. Available for refinancers only. No application fee and no settlement fee. No monthly, annual or ongoing fees. Unlimited extra repayments. Online access via Smart Money App. 30% deposit required.

  • SMSF Home Loan

    • LVR <80%
    Interest rate
    7.49 % p.a.
    Variable
    Comparison rate
    7.50 % p.a.
    Initial monthly repayment
    $3,493
    Go to site

    Enjoy a competitive rate on your SMSF home loan with Loans.com.au. Available for purchase and refinance. No application fee and no settlement fee. No monthly, annual or ongoing fees. Unlimited extra repayments. Online access via Smart Money App. 20% deposit required.

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

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