Refinance Your Investment Property Loan in Australia
Quick Answer
Why do investors refinance their investment property loans?
Lower rate, better terms or equity release
Refinancing an investment property loan can lower your interest rate, switch from principal and interest to interest-only, release equity to fund your next purchase, or consolidate multiple investment debts. Most lenders require at least 20% equity and will assess rental income alongside your personal earnings to confirm serviceability.
- Typical investor LVR cap 80% (without LMI)
- Common refinance reason Lower rate or IO switch
- Typical timeframe 2 to 6 weeks
- Key lender focus Rental income, equity, debt
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Two factors that shape your investment property refinance
Rental income and serviceability
Lenders use rental income to support your borrowing capacity, but most only count 70% to 80% of the gross rent to allow for vacancy and costs. Your total debt across all properties, personal income, living expenses and existing commitments are assessed together.
Income Risk
Equity position and LVR
Your equity determines how much a new lender will offer. Most require at least 20% equity to refinance an investment property without LMI. If property values have risen since purchase, you may have usable equity for a rate switch, cash-out or deposit on your next investment.
Security RiskTypical LVR ranges for investment property refinancing
These are general guide ranges only. Final terms depend on the lender, valuation, rental income, borrower profile and total debt position.
-
Up to 60% LVR Vacant or weaker property
-
Up to 70% LVR Tenanted, limited docs or older loan
-
Up to 80% LVR Strong income, tenanted, clean credit
-
Up to 90% LVR With LMI, subject to lender policy
Investor refinances above 80% LVR typically require LMI, and not all insurers cover investment loans at higher ratios. A strong equity position gives you more lender options and better pricing.
Looking to refinance your investment property loan?
What lenders look for in an investment property refinance
An investment loan refinance is assessed on rental income, total debt exposure, equity position and borrower conduct across all properties.
Current rental income supported by a lease or rental appraisal- Minimum 20% equity for most lenders without LMI
- Serviceability across all loans, debts and living expenses
- Clean credit history and consistent repayment conduct
- Clear loan purpose: rate switch, equity release or restructure
Self-employed investors with limited documentation may also want to explore low doc home loans.
Common investment refinance scenarios
Investors refinance for different reasons depending on their portfolio stage, tax position and cash flow needs.
Rate reduction switch- Interest-only switch
- Equity release to invest
- Portfolio restructure
- Fixed rate expiry switch
If your fixed rate is ending soon, see fixed rate expiry refinancing.
Key factors for investment property refinancing
These factors determine whether your refinance suits a major bank, non-bank lender, low doc pathway or specialist investor product.
01
Rental income
Lenders typically shade rental income to 70% to 80% of gross rent. A signed lease or current rental appraisal strengthens your position.
02
Total debt exposure
Every investment loan, home loan, credit card and personal loan counts. Lenders assess your total position, not just the property being refinanced.
03
Property valuation
The new lender will order a valuation to determine your current LVR. If the property has grown in value, your equity position improves.
04
Repayment type
Switching between principal and interest and interest-only affects your serviceability calculation. Interest-only can improve short-term cash flow but reduces equity growth.
05
Borrower structure
Whether the loan is held personally, in a trust, company or jointly affects which lenders can refinance and how income is assessed.
06
Break costs
If your current loan is on a fixed rate, early exit may trigger break fees. These can be significant and should be weighed against potential savings.
Common problems with investment property refinancing
Investment property refinances can fail or stall even when the property is performing well. These are the issues lenders raise most often.
Serviceability fails on total debt
Even if the investment property covers its own costs, lenders assess your total commitments. Multiple properties, credit cards and personal loans can push you past the serviceability buffer.
Reduce unused credit limits and pay down non-deductible debt before applying.
Valuation comes in lower than expected
The new lender's valuation may not match your estimate or what you paid. A lower valuation increases your LVR and may reduce the amount available for cash-out or rate improvement.
Get a realistic view of your property's current value before committing to a refinance amount.
Rental income is not documented
Without a current lease or recent rental statements, the lender may shade the rent lower or exclude it entirely. This directly reduces your borrowing capacity.
Provide a copy of the lease agreement and recent rental ledger with your application.
Fixed rate break costs eat the savings
Breaking a fixed rate early can result in significant break fees, sometimes thousands of dollars. If the savings from refinancing do not clearly outweigh the break cost, waiting may be the better option.
Ask your current lender for an exact break cost quote before proceeding with a new application.
How to refinance your investment property in 6 steps
Step
01
Know your current loan position
Check your current rate, remaining balance, fixed rate expiry date, and any exit or break fees that may apply.
Step
02
Confirm your refinance goal
Decide whether you want a lower rate, interest-only switch, equity release, debt consolidation or a combination.
Step
03
Gather your documents
Prepare your lease agreement, rental statements, recent payslips or tax returns, bank statements and details of all existing debts.
Step
04
Compare lender options
Review investor rates, policies on interest-only, LVR caps and cash-out rules across banks and non-bank lenders.
Step
05
Submit your application
Lodge a clean, complete file with the new lender. The valuation will be ordered and your serviceability assessed.
Step
06
Settle and discharge the old loan
Once approved, the new lender pays out the old loan at settlement. Your existing lender processes the discharge of mortgage.
How investment property refinancing works in Australia
Investment property refinancing replaces your current investor loan with a new loan from the same or a different lender. The most common reasons are to access a lower interest rate, switch to interest-only repayments, release equity for further investment, or restructure multiple investment loans into a cleaner arrangement.
Unlike owner-occupier refinancing, investor loans are assessed with a heavier focus on rental income, total portfolio debt and the property's tenancy position. Lenders typically count 70% to 80% of gross rental income for serviceability and apply a buffer rate (usually around 3% above the actual rate) across all debts. This means investors with multiple properties can face tighter serviceability even when each property is cash-flow positive.
If you are releasing equity to fund another purchase, the new lender needs to see that you can service both the increased loan and the new acquisition. This is where investors with growing portfolios sometimes hit capacity limits with one lender and need to compare across the market. For a broader view of how to use equity strategically, see equity release and leveraging.
The right refinance pathway depends on your equity, income evidence, property type and what you want to achieve. A standard bank refinance may suit a straightforward rate switch, while investors with complex structures, self-employed income or credit issues may need a specialist or bad credit refinancing pathway. Understanding the costs involved is also important before you proceed. See refinancing costs and break fees for a breakdown.
Get help with your investment property refinance
Investment loan refinancing involves assessing rental income, total debt, equity position and lender-specific investor policies. A suitable finance contact can help present your scenario to the right lenders.
Property Finance Help connects users with finance professionals who understand investor lending and refinancing.
Property Finance Help is a lead generation service, not a lender, broker, or financial adviser. All information on this website is general in nature and does not take into account your personal objectives, financial situation, or needs. Consider seeking independent professional advice before making any financial decision.
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