Table of Contents
- Investment Property Loan Interest Rates: 2026 Comparison
- RBA Cash Rate Forecast 2026 and What It Means for Investors
- Principal and Interest vs Interest Only Investment Loan: Which Suits You?
- Deposit Requirements, LMI, and Loan-to-Value Ratio for Investors
- How to Get a Lower Investment Loan Rate in 2026
- Tax Implications of Investment Property Loan Interest
- Refinancing Investment Property in 2026: When and How
- Conclusion
Last Updated: August 10, 2026
Investment Property Loan Interest Rates: 2026 Comparison
Investment property loan interest rates can vary between lenders and products. The rate available to a borrower will depend on factors including the loan-to-value ratio, repayment type, loan features, lender policy and the borrower’s circumstances.
FinanceCorp provides credit assistance and may explain and compare available investment-property lending options from the FinanceCorp lender panel, subject to broker accreditation, lender criteria and the consumer’s circumstances. FinanceCorp does not compare every lender or loan product in the market.
This article explains general considerations that may be relevant when comparing investment-property lending in 2026.
Current Rates at a Glance: Major and Non-Bank Lenders
Investment-property interest rates vary between lenders and products and may change without notice. Available rates can depend on factors such as loan-to-value ratio, repayment type, loan amount, security property, loan features and lender pricing policy.
Borrowers should compare the applicable interest rate, comparison rate where relevant, fees, loan features and repayment arrangements rather than relying on a single advertised rate.
FinanceCorp may explain and compare available options from its lender panel based on the information provided and the consumer’s circumstances.
The comparison rate is the number that matters most when comparing products. It folds in most fees and charges, giving you a more honest picture of the true annual cost of the loan.
Interest Rates and RBA Cash Rate Changes
Changes in the RBA cash rate can influence lenders’ funding costs and home-loan pricing, but individual lenders decide whether, when and by how much to change their lending rates.
Variable-rate borrowers may experience changes in repayments if their lender changes the applicable interest rate. Fixed-rate loans generally retain the contracted fixed rate during the fixed period, subject to the terms of the loan.
Future RBA decisions and lender-rate movements cannot be predicted or guaranteed. Borrowers considering fixed or variable lending may wish to compare rates, fees, loan features, break-cost provisions and repayment flexibility.
Borrowers may choose to explore illustrative repayment scenarios using different interest-rate assumptions. These scenarios can help show how estimated repayments may change if interest rates change, but they are not forecasts or lender serviceability assessments.
At the time of publication, APRA requires authorised deposit-taking institutions to apply a mortgage serviceability buffer of at least 3 percentage points above the applicable interest rate when assessing serviceability for new housing lending. Individual lender policies, assessment methods and any permitted exceptions may vary.
Principal and Interest vs Interest Only Investment Loan: Which Suits You?
Principal-and-interest and interest-only repayment arrangements have different repayment profiles, costs and lender requirements.
With principal-and-interest repayments, each scheduled repayment generally includes both interest and a reduction in principal. With an interest-only arrangement, scheduled repayments during the interest-only period generally do not reduce the principal balance unless additional repayments are made and permitted.
Interest-only periods are generally limited and, when the interest-only period ends, repayments may increase because principal must then be repaid over the remaining loan term. Interest rates and eligibility requirements may also differ between repayment types.
The appropriate repayment structure will depend on the consumer’s requirements, objectives and financial situation and, where relevant, taxation advice from a registered tax agent or suitably qualified accountant.
Interest on borrowing used to acquire or maintain an income-producing rental property may be deductible, subject to the applicable taxation rules and the use of the borrowed funds. Where borrowed funds are used partly for private purposes, interest expenses may need to be apportioned.
Taxation outcomes should be confirmed with a registered tax agent or suitably qualified accountant. FinanceCorp does not provide taxation advice.
Factor | Principal & Interest | Interest Only |
|---|---|---|
Monthly repayments | Higher | Lower |
Interest rate | Generally lower | Generally higher |
Equity build | Faster | Slower |
Tax-deductible interest | Lower over time | Higher in short term |
For most investors with a long-term capital growth strategy, P&I is the more disciplined approach. Interest-only suits investors who need to preserve cash flow across a property portfolio or who are in a high-income tax bracket where maximising deductions is a priority.
Deposit Requirements, LMI, and Loan-to-Value Ratio for Investors
Loan-to-value ratio (LVR) compares the loan amount with the lender-assessed value of the property. LVR can affect lender eligibility, pricing, security requirements and whether lenders mortgage insurance or another risk fee may apply.
Deposit and equity requirements vary between lenders, borrowers and transactions. Lenders mortgage insurance may apply to some higher-LVR loans and protects the lender rather than the borrower.
Borrowers who own other property may be able to use available equity as part of a lending structure, subject to valuation, lender criteria, serviceability and credit assessment. Using another property as security can create additional risks and should be understood before proceeding.
Taxation and legal implications should be discussed with appropriately qualified professionals.
LMI and other borrowing expenses may have taxation consequences. The timing and availability of any deduction should be confirmed with a registered tax agent or suitably qualified accountant.
Factors That May Affect an Investment Loan Rate
The biggest mistake investors make is accepting the rate their current bank offers without testing the market. Loyalty rarely translates to better pricing in Australian mortgage lending.
Investment-property loan pricing may be affected by factors including:
- – loan-to-value ratio
- – repayment type
- – loan amount
- – security property
- – loan features
- – credit history
- – lender pricing policy
- – the borrower’s financial circumstances
Different lenders may price the same application differently. FinanceCorp may explain and compare available lender-panel options after gathering information about the consumer’s requirements, objectives and financial situation.
A lower rate does not necessarily mean a loan will have the lowest overall cost or be appropriate for the borrower’s requirements and objectives.
Stress Testing Your Investment Portfolio Before You Apply
Stress testing is the practice of modelling your loan repayments at a rate significantly above your current rate, typically 2-3 percentage points higher, to assess whether your portfolio remains viable if conditions change.
Lenders apply their own serviceability buffer when assessing applications. As of 2026, the Australian Prudential Regulation Authority’s serviceability guidance requires lenders to assess borrowers at a minimum buffer above the loan rate. You can check current APRA guidance directly via APRA’s prudential standards and guidance. Run the same calculation yourself before you apply. If the stressed repayment figure exceeds your rental income plus a comfortable portion of your other income, your borrowing capacity may be more constrained than you expect.
A simple stress test: take your proposed loan balance, apply a rate 3 percentage points above your variable rate, and calculate the monthly P&I repayment. Compare that figure against your expected rental income. The gap tells you how much of your personal income you need to service the loan under stress conditions.
Taxation Considerations for Investment Property Borrowing
Taxation treatment can depend on how borrowed funds are used and the individual circumstances of the taxpayer. Interest on borrowing used for an income-producing rental property may be deductible, while private use of borrowed funds can affect deductibility.
Redraws, refinancing and mixed-purpose borrowing can create taxation consequences because the use of borrowed funds may determine whether interest is deductible.
FinanceCorp does not provide taxation advice. Borrowers should obtain advice from a registered tax agent or suitably qualified accountant before relying on any taxation treatment associated with an investment-property loan.
Refinancing an Investment Property
Some investment-property borrowers review their existing loan when interest rates, lender policies, property values, loan features or their circumstances change.
Refinancing involves a new lending assessment and may involve valuation requirements, discharge fees, establishment costs, fixed-rate break costs and changes to loan features or repayment arrangements.
A borrower considering refinancing may compare the current loan’s rate, fees, features and remaining term with available options from the broker’s lender panel. A lower rate does not necessarily result in a lower overall borrowing cost, particularly where fees apply or the repayment term is extended.
Any refinancing recommendation or application remains subject to applicable enquiries, verification, preliminary assessment, lender criteria and approval.
Understanding Investment-Property Lending Options
Investment-property lending can involve different interest rates, repayment types, fees, loan features, lender policies and assessment requirements. The lowest advertised interest rate does not necessarily result in the lowest overall borrowing cost or meet a borrower’s requirements and objectives.
FinanceCorp provides credit assistance under Australian Credit Licence 395037. FinanceCorp brokers gather information about the consumer’s requirements, objectives and financial situation before explaining and comparing available options from the FinanceCorp lender panel. FinanceCorp does not compare every lender or loan product in the market.
Contact FinanceCorp to discuss an investment-property lending enquiry, indicative borrowing capacity and available lender-panel options. Any borrowing estimate is indicative only. Any lending recommendation or application remains subject to applicable enquiries, verification, preliminary assessment, lender criteria and approval.
Frequently Asked Questions
How can I compare investment-property loan rates?
A competitive variable investment property loan rate in 2026 sits below 6.20% p.a. for borrowers with a loan-to-value ratio under 80%. The Westpac Flexi First Option starts from 5.85% p.a. for principal and interest repayments at that LVR tier, while most major banks sit between 6.09% and 6.96% p.a. Your comparison rate, which includes fees, is the more reliable figure to compare across lenders. A mortgage broker can help identify the most competitive option for your specific borrowing profile.
Will mortgage rates go down in 2026 in Australia?
The RBA has signalled a cautious approach to monetary policy, and any further cash rate movements in 2026 will depend on inflation data and labour market conditions. If the cash rate falls, variable investment loan rates typically follow within weeks. Fixed rate periods may already price in some anticipated cuts, so locking in now does not always guarantee savings. Checking current RBA announcements and speaking with a broker before committing to a fixed or variable rate is the most reliable approach.
What is the difference between principal and interest vs interest-only investment loans?
Principal and interest repayments reduce your loan balance each month, building equity faster and attracting lower interest rates from most lenders. Interest-only repayments cover just the interest charge, keeping monthly costs lower in the short term but leaving the loan balance unchanged. Investors often choose interest-only during early ownership to maximise cash flow and preserve deductible interest, but lenders restrict interest-only terms and charge higher rates for them. Your accountant can advise which structure best suits your tax position and long-term property portfolio goals.
How do RBA cash rate decisions impact investment property loans?
The RBA cash rate is the benchmark rate at which banks borrow overnight funds. When it rises, lenders typically pass the increase to variable rate borrowers within weeks, lifting monthly repayments. A fall in the cash rate usually produces the reverse effect. Fixed rate investment loans are not immediately affected during the fixed period, but revert to a variable rate at the end of that term. Investors with multiple loans should monitor RBA announcements closely, as even a 0.25% rate movement can materially affect cash flow across a property portfolio.
Can I deduct investment property loan interest on my Australian tax return?
Yes. Under Australian tax law, interest charged on a loan used to purchase an income-producing investment property is generally tax-deductible. This applies to both variable and fixed rate loans. If your property is negatively geared, the net rental loss can offset other taxable income. However, deductibility depends on the loan being used exclusively for investment purposes. Mixed-use loans or redraws used for personal expenses can complicate your claim. Always confirm your specific situation with a registered tax agent or accountant before lodging.
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