Investment Loans for Property Investors

Investing in property is one of the most widely used strategies for building long-term wealth in Australia. Whether you are buying your first investment property or expanding an existing portfolio, securing the right investment loan is a critical step. At Lexor Finance, we work with clients in Truganina, Victoria and across Australia to access investment loan options from banks and lenders across Australia, helping investors find structures that suit their individual circumstances.

Understanding Investment Loans

An investment loan is a loan taken out to purchase a property that you intend to rent out or hold as an income-producing asset. Investment loan products differ from standard home loans in several important ways. Investor interest rates are generally higher than owner-occupier rates, and investment loan features such as repayment type, offset accounts, and redraw facilities vary between lenders. Under the current prudential framework set by the Australian Prudential Regulation Authority (APRA), lenders must assess your ability to service an investment loan at an interest rate at least 3.0 percentage points above the loan product rate. This serviceability buffer has been in place since October 2021 and was confirmed again at APRA's May 2026 macroprudential review.

Lenders also apply a debt-to-income (DTI) ratio limit, which came into effect on 1 February 2026. Under this rule, authorised deposit-taking institutions can lend no more than 20 per cent of new investor loans to borrowers with a total DTI ratio of six times or greater. This is an important consideration when calculating investment loan repayments and understanding your overall borrowing position.

Repayment Structures: Interest Only and Principal and Interest

One of the key decisions in property investment finance is choosing between an interest only investment loan and a principal and interest loan. An interest only loan means your repayments cover only the interest charged, not the loan balance itself. This can help manage cash flow in the early years of owning a rental property, though it does mean the loan amount does not reduce during the interest-only period. A principal and interest loan reduces the outstanding balance with each repayment, building equity in the property over time.

It is worth noting that under APRA's Prudential Standard APS 112, investor loans and interest-only loans generally attract higher risk weights than owner-occupied principal-and-interest loans at the same loan to value ratio (LVR). A long-term interest-only residential loan is classified as non-standard where the LVR exceeds 80 per cent and the interest-only period is greater than five years or is not specified. Lexor Finance can help you understand how these classifications may affect your investment loan application and the investment loan interest rate you are offered.

Variable Rate and Fixed Rate Investment Loans

Investors can generally choose between a variable rate and a fixed rate investment loan, or a combination of both. A variable interest rate moves in line with market conditions and lender decisions, meaning your repayments can go up or down over time. A fixed interest rate locks in your rate for a set period, providing certainty over repayments. Some lenders also offer rate discount options for investors who meet certain criteria, such as borrowing above a particular loan amount or maintaining a strong repayment history.

Lexor Finance compares investment loan options across a wide panel of lenders to help clients understand which rate structure aligns with their property investment strategy. We do not make decisions for you, but we provide the information and access needed to make an informed choice.

Loan to Value Ratio, Equity, and Lenders Mortgage Insurance

Your loan to value ratio (LVR) is the proportion of the property's value that you are borrowing. For example, if you purchase an investment property worth $600,000 and borrow $480,000, your LVR is 80 per cent. The investor deposit you contribute directly affects your LVR and, in turn, the investment loan interest rate and conditions you may be offered.

Where the LVR exceeds 80 per cent, most lenders will require Lenders Mortgage Insurance (LMI). LMI is a cost borne by the borrower and is calculated on a sliding scale based on the loan amount and LVR. It protects the lender, not the borrower, in the event of default. Stamp duty may also be payable on the LMI premium in some states and territories.

For investors who already own property, it may be possible to leverage equity from an existing property to fund the investor deposit on a new purchase. This approach, sometimes called equity release, can reduce the need for cash savings while using the growth in your existing property's value to support portfolio growth. Lexor Finance can help you understand whether this approach may be suitable based on your current financial position.

Tax Considerations for Property Investors

Under the Income Tax Assessment Act 1997, interest on borrowings used to acquire or hold a residential rental property is generally deductible against assessable income to the extent the property is rented or genuinely available for rent. Other claimable expenses, such as council rates, property management fees, insurance, repairs, and depreciation, may also be deductible. Investors should speak with a qualified tax adviser to understand how these rules apply to their specific situation.

Negative gearing benefits apply where the costs of holding an investment property exceed the rental income it generates. For properties held at 7:30pm AEST on 12 May 2026, losses continue to be fully deductible against other income, including wages, until the property is sold. For established residential investment properties acquired after that date and time, new rules take effect from the 2027-28 income year, limiting deductions to other residential property income only. Eligible new builds acquired after 12 May 2026 retain access to the existing negative gearing treatment. These are significant legislative changes that affect how investors can maximise tax deductions, and Lexor Finance strongly recommends seeking advice from a registered tax professional before making any investment decisions.

Vacancy rate is another factor worth considering. A property that sits vacant for extended periods not only reduces passive income and rental income but may also affect the deductibility of holding costs during periods when the property is not genuinely available for rent.

Investment Loan Refinancing

If you already hold a rental property loan, an investment loan refinance may be worth exploring. Refinancing involves moving your existing loan to a new lender or product, potentially to access a different investment loan interest rate, improved investment loan features, or to consolidate debt. Lexor Finance works with clients across Australia to review existing home loans and investment loan products, comparing options from our lender panel to identify whether refinancing may be appropriate.

For investors considering their broader refinancing options, it is important to weigh up any costs associated with exiting an existing loan, such as break fees on fixed rate loans, against the potential benefits of a new arrangement.

Why Work with Lexor Finance

Lexor Finance is a family-run finance broking business serving clients in Truganina, Victoria and across Australia. We bring genuine industry knowledge to every client conversation, helping investors understand their investment loan options without pressure or unnecessary complexity. From calculating investment loan repayments to comparing investor interest rates and understanding the impact of LVR on your investment loan amount, our team is here to provide clear, professional guidance at every stage.

We access investment loan options from banks and lenders across Australia, giving our clients a broad view of the property investment loan market. Whether you are buying an investment property for the first time, looking to build wealth through a growing portfolio, or seeking to achieve financial freedom through passive income, Lexor Finance is committed to helping you access the right information and the right lender for your needs. Speak with our team today to discuss your investment loan options.

Step 1: Initial Conversation
We start with a simple chat to get to know you and understand what you are looking for. Whether you are buying a home, investing in property, or looking for a business loan, this is your chance to ask questions and share your goals. There is no obligation and no pressure.

Step 2: Understanding Your Situation
Next, we take a closer look at your financial position. We will ask about your income, expenses, assets, and any existing debts. This helps us build a clear picture of where you stand and what options are available to you.

Step 3: Researching Your Options
With access to a wide panel of lenders, we do the legwork for you. We compare loan products, interest rates, fees, and features to find solutions that suit your needs and goals - not just the first option that comes along.

Step 4: Presenting Our Recommendation
We present you with a clear recommendation and explain why it is the right fit for your situation. We walk you through the numbers in plain language so you can make a confident, informed decision.

Step 5: Preparing Your Application
Once you are happy to move forward, we prepare your application and gather the required documents. We handle the details carefully to give your application the best possible chance of approval.

Step 6: Lodging and Managing Your Application
We submit your application to the lender and stay on top of the process from there. We liaise with the lender on your behalf, respond to any requests quickly, and keep you updated every step of the way.

Step 7: Settlement and Beyond
Once your loan is approved and settled, our job is not done. We check in with you regularly to make sure your loan is still working for you. As your circumstances change, we are here to review your options and help you stay on track.