Compare investment home loans for January 2025

What is an investment home loan?

Investment home loans are used to purchase properties that the borrower doesn’t intend to live in. 

Instead, investors borrow the money to buy a property, intending to rent it out and profit both from rental income and (ideally) from property value growth.

This type of home loan differs from the sort you’d apply for if you wanted to live in the property yourself. Those are known as owner-occupier home loans.

How to compare investment home loans

Investment loans aren’t one-size-fits-all, but a general guideline is to look for a loan that balances features and costs with your property investing aims. 

When you compare, look at: 

1. Interest rates 

The interest rate on your loan will determine partly how much you need to repay each month. The higher your interest rate, the more you will need to charge your tenants for rent. Charge too much, and no one will be able to afford your rental, or you’ll start paying for your mortgage out of pocket. 

Look for lenders charging lower than the average investment loan rate (see the monthly snapshot above for the latest figures). Typically, you’ll find lower interest rates from smaller lenders, rather than the Big Four banks. 

2. Fees

Another consideration to make when you compare investment loans is fees. Simply put, they’ll eat into your profits. So, try to minimise your exposure to ongoing fees, and be aware of how much application and settlement fees set you back. 

3. Loan features

Different investment loans have options that could help you save, like free extra repayments, redraw facilities, offset accounts, and interest-only periods. Look into which features could be helpful to you.

Investing in a second property

Investing in real estate can make it easier to finance a second property, such as another investment or your dream home. How? By using your home equity.

Your equity is the value of your ownership. If you own a property worth $1 million but have $200k left on your mortgage, then you have $800k in home equity. 

Equity ($$) = Property value - loan value

If your loan size decreases or your property value increases, your equity rises. 

Equity is a form of wealth you can use to fund projects, like a second property. How it works is you refinance your home loan to “borrow” from your equity, giving you some cash. 

However, this tactic has pros and cons, so read more in the button below.

What are the benefits of investment home loans?

Only some people find their dream home right away. And that’s okay! Investment home loans let you access the benefits of owning property without living there.

Some perks of investing in property include:

• Capital gains when you sell.
• Rental income from tenants. 
• Home equity as your ownership share increases.

The right investment home loan can make your investment profitable by cutting down on extra costs and accelerating your property journey toward full ownership.

Australian property is a relatively low-risk asset since property prices generally increase over time (a phenomenon called “capital growth”), though this will vary by location and property. 

Property investors also get a host of tax benefits.