Simple hacks to compare investment loans

Comparing investment loans starts with knowing what you will use

The loan with the lowest advertised rate is rarely the right investment loan for your strategy. You need to identify which features you will actually use, then compare products that deliver those features at a sustainable cost. Consider an investor who refinances a Caloundra townhouse from a low-rate product with no offset to a slightly higher rate with a full offset facility. The rental income sits in offset, reducing daily interest charges and keeping funds accessible for the next deposit. The marginally higher rate is offset by the interest saved, and the liquidity supports faster portfolio growth. The product that looked cheaper on paper would have cost more over time.

Interest-only versus principal and interest repayments

Interest-only repayments keep your monthly outgoings lower and preserve cash flow for additional deposits or holding costs during vacancy periods. Principal and interest repayments reduce your loan balance over time and build equity, but they also increase your monthly commitment and reduce the flexibility to redirect capital. Most lenders offer interest-only periods of up to five years on investment loans, after which the loan reverts to principal and interest unless you request an extension. Extensions are assessed on current serviceability and are not automatic.

Under current prudential rules, a long-term interest-only residential loan is classified as non-standard where the LVR is greater than 80 per cent and the contractual interest-only period exceeds five years or is not specified. This classification affects the lender's capital treatment and may influence pricing or approval conditions. If you plan to hold multiple properties and recycle equity, interest-only terms give you more control over when and where your capital is deployed. If your strategy is to build equity in a single asset and reduce debt over time, principal and interest repayments align with that objective.

How fixed and variable rates affect your borrowing capacity and flexibility

Variable rate investment loans allow you to make extra repayments, redraw funds, and access offset accounts without restriction. Fixed rate investment loans lock in your repayment amount for a set period, but they generally do not offer offset, limit extra repayments to a small annual threshold, and charge break costs if you exit early. Break costs apply when you repay a fixed rate loan before the end of the fixed term, and they are calculated based on the difference between your fixed rate and the lender's current wholesale funding cost. If rates have fallen since you fixed, the break cost can be substantial.

When comparing products, ask whether the loan allows partial fixes or split facilities. A split loan lets you fix a portion of your borrowing and keep the remainder variable. This structure gives you rate certainty on part of the debt while preserving flexibility on the rest. In our experience, investors who plan to buy again within two to three years benefit from keeping at least 50 per cent of their borrowing on variable terms, so they can access equity and redraw without penalty when the next opportunity appears.

Offset accounts and how they interact with rental income

An offset account is a transaction account linked to your investment loan, and the balance in that account reduces the principal on which interest is calculated. If your loan balance is $500,000 and your offset holds $30,000, you pay interest on $470,000. The interest saved is not counted as income, so there is no tax implication. Rental income deposited into an offset account continues to reduce your interest cost every day until you withdraw it for other purposes.

Not all investment loan products include offset. Some lenders offer offset only on variable rate loans or charge a higher interest rate for the feature. When comparing products, calculate the annual interest saving based on the average balance you expect to hold in offset, then compare that saving to the rate difference or annual fee. If you hold a buffer of three to six months' rental income in offset, the saving usually exceeds the cost. Offset account balances do not reduce the loan amount for LVR purposes under APS 112, so they do not affect your ability to avoid LMI or access certain pricing tiers.

LVR bands and how they change your rate and LMI cost

Lenders price investment loans in LVR bands, typically at 60 per cent, 70 per cent, 80 per cent and 90 per cent. As your LVR increases, the interest rate generally increases and the lender's credit risk capital requirement also increases under APS 112. A loan at 79 per cent LVR may attract a rate 0.10 to 0.20 percentage points lower than a loan at 81 per cent LVR, even though the dollar difference in deposit is small. At 80 per cent LVR and below, you avoid LMI. Above 80 per cent, the lender will require LMI, and the premium is capitalised into the loan or paid upfront.

When comparing loans, model the total cost at each LVR band. For example, borrowing $450,000 at 85 per cent LVR on a Maroochydore unit will incur LMI of several thousand dollars, plus a higher interest rate. Borrowing $420,000 at 79 per cent LVR avoids the LMI premium and secures a lower rate. The upfront saving from the higher LVR loan is often reversed within the first 12 to 18 months. If you are close to an LVR threshold, increasing your deposit by a small amount can deliver a significant ongoing saving.

Comparing lender appetite for Sunshine Coast property types

Not all lenders treat Sunshine Coast investment properties the same way. Apartments in Maroochydore or Mooloolaba are generally well-supported across most lender panels, particularly in buildings close to the beach or the new Maroochydore CBD precinct. Townhouses in Caloundra, Buderim and Sippy Downs are also widely accepted. Holiday-managed properties or units in resort-style complexes with commercial facilities may be restricted to a smaller group of lenders, and those lenders may apply higher interest rates or lower maximum LVRs.

When comparing investment loan options, confirm that the lender will accept the specific property type and location you are targeting. A lender offering a competitive rate on standard residential apartments may apply a loading or decline a property with commercial use rights or a management agreement that restricts owner occupancy. Understanding lender appetite before you make an offer saves time and prevents surprises at application. Your broker should identify which lenders are active in your target area and which products align with your property type. If you are buying your first investment property, confirming lender acceptance early is particularly important.

Portability and the ability to move your loan to a new security

Portability allows you to transfer your existing investment loan to a new property without discharging and reapplying. This feature is useful when you sell one property and buy another in quick succession, or when you want to retain a favourable rate or loan structure that is no longer available to new applicants. Not all lenders offer portability, and those that do may impose conditions, such as requiring the new property to be of equal or greater value, or requiring the loan to remain at the same or lower LVR.

When comparing products, ask whether portability is available and what the process involves. Some lenders treat portability as a variation and charge a small fee. Others treat it as a new application and require full income verification and serviceability assessment. If your strategy includes selling and reinvesting within a short period, portability can save several thousand dollars in discharge and application fees. If you plan to hold each property long-term, portability is less relevant, and you can prioritise other features.

Debt-to-income limits and how they restrict high-ratio borrowing from February 2026

From 1 February 2026, each ADI may lend up to 20 per cent of new investor loans to borrowers with a total DTI ratio of six times or greater. The limits apply separately to the owner-occupier and investor lending portfolios of each institution and apply to new lending only. If your total borrowing across all properties is more than six times your gross income, you may still be approved, but you will fall within the lender's restricted allocation. Once that allocation is filled for the quarter, further applications at high DTI ratios may be declined or deferred until the next quarter.

This restriction affects investors with large portfolios relative to their income, particularly those relying on rental income to service new loans. When comparing investment loan options, ask whether the lender counts rental income at 80 per cent or 100 per cent, and whether they net out interest and other holding costs before applying the DTI test. Lenders apply the DTI calculation differently, and a small change in methodology can move you from above to below the six-times threshold. Non-ADI lenders are not currently subject to the DTI limit, and they may offer a viable alternative for investors who exceed the threshold at major banks.

Structuring multiple loans and the benefit of separate splits

Investors with more than one property should compare lenders on their willingness to maintain each property loan as a separate facility, rather than cross-collateralising all properties under a single mortgage. Separate facilities give you the flexibility to sell one property and discharge its loan without affecting the other properties. Cross-collateralisation can reduce costs and simplify administration, but it locks all securities together and requires lender consent to release any single property.

When you expand your property portfolio, the structure you choose at the outset affects your ability to refinance, release equity, or sell individual assets later. Some lenders default to cross-collateralisation and require you to request separate splits. Others maintain standalone facilities by default. The product comparison should include a question about loan structure, not just rate and features. If you plan to build a portfolio of three or more properties, separate facilities are almost always the right structure, even if they carry slightly higher fees.

Serviceability overlays and how they vary by lender

APRA requires all ADIs to assess new borrowers' capacity to service a home loan, including a residential investment loan, at an interest rate that is at least 3.0 percentage points above the loan product rate. Some lenders apply additional overlays beyond the minimum buffer, particularly for investors with multiple properties or high DTI ratios. These overlays might include a higher assessment rate, a lower rental income shading (such as 75 per cent instead of 80 per cent), or the inclusion of future interest rate buffers on all existing debts, not just the new loan.

When comparing investment loan products, ask your broker to model your serviceability at each lender using the actual assessment rate and rental income treatment that lender applies. The difference in approved loan amount can be $50,000 to $100,000 or more between the most and least conservative lenders. If you are close to your serviceability limit, the choice of lender determines whether the purchase proceeds. If you have surplus capacity, the choice of lender should prioritise features and rate over maximum borrowing power.

Rate discounts and annual package fees

Many lenders offer tiered rate discounts based on the total lending relationship, the loan amount, or the LVR. A package fee of $300 to $400 per year may unlock a discount of 0.50 to 0.80 percentage points, which translates to several thousand dollars in annual interest savings on a typical investment loan. Some lenders waive the package fee if you hold other products with them, such as a transaction account, credit card, or owner-occupied home loan.

When comparing products, calculate the net benefit of the package after accounting for the annual fee. If the discount saves you $3,000 per year and the fee costs $395, the net benefit is $2,605. If the discount is only 0.20 percentage points and saves you $800, the package may cost more than it delivers. Also confirm whether the package rate is a fixed discount or subject to change. Some lenders reserve the right to vary the package discount, which can erode the value over time.

Call one of our team or book an appointment at a time that works for you. We compare investment loan options from banks and lenders across Australia, and we structure each loan to align with your next move and the one after that. Whether you are holding, building equity, or preparing to buy again, the right loan comparison starts with understanding where you are heading.

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