Investment Finance
Investment Property Loans Explained
5 min read- Finance Guide
- Updated 2026
Quick answer
Preferred LVR — at or below
80% LVR
Above 80% — LMI may apply, lenders more conservative
- Rate types available Variable, fixed or split
- Repayment types P&I or interest only
- Max loan term Up to 30 years
1300 421 044
1300 421 044
Detailed explanation
An investment property loan allows you to fund the purchase of a rental property while spreading repayment over a long term. The lender registers a mortgage over the property and assesses whether your overall financial position can support the debt, including under a higher assessment rate.
Core parts of an investment loan
Loan amount
Loan amount based on purchase price or valuation
Deposit or equity
Deposit or equity contribution
Interest rate
Interest rate that may be variable, fixed or split
Repayment type
Repayment type of principal and interest or interest only
Loan term
Term commonly up to 30 years
Property as security
Property used as security for the lender
How the lender assesses the deal
-
01. Income from employment, business or other acceptable sourcesPrimary income
-
02. Existing home loans, personal loans and credit cardsLiabilities
-
03. Living expenses and dependantsHousehold costs
-
04. Expected or existing rental incomeRental support
-
05. Credit history and repayment conductCredit file
-
06. Property type, condition and marketabilitySecurity quality
-
07. Serviceability with APRA’s 3 percentage point buffer applied above the actual loan rate for regulated lendersAPRA rule
Deposit, LVR and LMI
LVR is the loan amount as a percentage of the property value
Example: a $640,000 loan on an $800,000 property is 80% LVR
Many lenders prefer 80% LVR or lower for investor loans
Above 80% LVR, LMI may apply and lenders may be more conservative
Some lenders offer investor loans above 80% LVR, subject to P&P
LVR example — $800,000 property
Loan ($640K)
80% LVR
- $0
- $640K loan
- $800K value
Above 80% — LMI likely
Higher cost, fewer lenders, stricter policy
At 80% — no LMI
Widest lender choice, better pricing
Cash flow and deductions
Rent can offset part of the repayment burden, but it rarely covers every cost
Investors also need to consider rates, insurance, maintenance and vacancy
Interest — generally deductible
The ATO allows interest deductions on rental property loans if the borrowing is for rental use
Principal — not deductible
Principal repayments are capital in nature and are not deductible
Need Help with your Project?
Common problems
Investment loans often slow down because the numbers look workable in theory but do not fit the lender’s assessment model.
Borrowing capacity lower than expected
Borrowers often assume all rent will be counted and that actual repayments are the only figure that matters.
Possible solutions include:
reassess borrowing capacity using lender policy- reduce other debts and credit limits
- increase deposit or available equity
- choose a more conservative purchase price
Higher costs than expected
build a full purchase cost estimate before applying
Possible solutions include:
- build a full purchase cost estimate before applying
- keep funds aside for cash flow gaps
- stay at or below 80 percent LVR where possible
- review whether principal and interest or interest only suits the strategy better
Loan structure not aligned to strategy
A borrower may choose a structure that works poorly for cash flow, tax records or future borrowing plans.
Possible solutions include:
- split owner occupied and investment debt correctly
- keep investment borrowings clearly separated
- consider whether interest only suits the short term plan
- choose offset and redraw features carefully
Steps to get Finance
Step
01
Review investment goals, deposit, equity and cash flow.
Step
02
Assess borrowing power based on income, debts and expected rent.
Step
03
Obtain pre approval or a credit backed assessment.
Step
04
Find a suitable property and submit the full application.
Step
05
Complete valuation, approval and loan documents.
Step
06
Settle the purchase and manage the property as an investment.
Speak With A Construction Loan Specialist
Property development finance can vary significantly depending on the project size, location, approvals, and the developer's experience.
A specialist can review your project and help determine which lenders may be able to fund it.
Speak with a finance specialist about your Property funding project
Submit the short form below and a development finance specialist will review your project and discuss possible funding options.
Contact Form
Your enquiry is confidential
Prefer to speak with someone directly ?
Call us to discuss about your project finance queries
Additional Questions
You may also find these questions helpful
-
01What is the difference between owner occupied and investment property loans
-
02How much can you borrow for an investment property
-
03Do investment property loans require a 20 percent deposit
-
04Can rental income help you qualify for an investment loan
-
05Are investment property loan interest repayments tax deductible
