An investment property loan finances a property you intend to rent out. Lenders price it slightly higher than owner-occupied lending, allow interest-only repayments for 1–5 years, count 70–90% of the expected rent as income, and let you use equity in your home as the deposit. The right structure — which loan holds the deposit, whether to use interest-only, and how to keep loans uncrossed — matters more than the headline rate because it drives tax deductibility and your ability to buy again.
This page is for people researching investment property loans and related options such as investment home loan, property investment finance, investment loan mortgage broker. It explains how this type of finance generally works, who it may suit, the issues that can affect lender approval, common scenarios and the steps involved from initial review through to settlement or funding.
Every application is assessed on its own facts. Property or asset value, income, expenses, existing debts, credit conduct, entity structure and lender policy can all change the outcome. The information below is general and is designed to help you ask better questions before choosing a lender or loan structure.
An investment loan affects more than the property being purchased. The lender chosen today can influence how existing debts are assessed when you apply again, how easily equity can be released and whether future investments remain practical. Investors with plans to grow a portfolio often benefit from looking at borrowing capacity and security structure several purchases ahead.
A homeowner with usable equity may be able to create a separate loan split against an existing property and use those funds toward an investment deposit and purchasing costs. Keeping loan purposes clearly separated can make the structure easier to manage. Tax outcomes depend on the use of borrowed funds, so tax advice should come from a qualified accountant or adviser.
Interest-only repayments can reduce required repayments for a period, while principal-and-interest repayments progressively reduce the loan balance. The most suitable choice depends on cash flow, lender pricing, investment strategy and tax advice. Interest-only terms expire, so investors should also understand the repayment change that can occur when a loan converts to principal and interest.
Broker's Guide
What you need to qualify, what to have ready, where lender policies genuinely differ, and the mistakes we see most often. General information — every application is assessed on its own facts.
Scenario 1
Situation: Home worth $850k with a $380k loan, want to buy a $550k unit.
How we'd approach it: Separate equity split of $130k on the home loan for deposit and costs (keeps interest clearly deductible), then a standalone 80% loan on the unit — no cross-collateralisation.
Scenario 2
Situation: Two existing investments on P&I with a major bank; latest application declined.
How we'd approach it: Move to a lender that uses actual repayments on existing debt and higher rental shading; consider IO on existing loans to free cash flow while keeping the P&I plan.
Scenario 3
Situation: Accountant recommends a discretionary trust for asset protection.
How we'd approach it: Choose from the lenders who accept trust borrowers with individual guarantees; allow extra time for trust deed review.
Our Approach
We start by understanding the full scenario and what you want the finance to achieve. Depending on the transaction, our work can include:
Real Situations
Investment loan strategy changes as a portfolio grows. Common investor situations include:
Step by Step
Initial strategy call and fact-find
Review relevant income, expenses, liabilities, assets and supporting documents
Identify the main lending objective and any policy constraints
Compare suitable lenders and structures
Present the recommended option, expected repayments, fees and key conditions
Prepare and lodge the application after you decide to proceed
Manage lender questions, valuation or asset checks and approval conditions
Complete documents and settlement or funding
Review the lending again when your circumstances or lender pricing change
A loan approval is only one part of the process. Derwent Finance focuses on understanding the objective, comparing lender policy and helping manage the application from initial strategy through to settlement. We assist borrowers across Australia with home loans, refinancing, investment, construction, self-employed, complex, commercial and business finance scenarios.
Where the best outcome is to keep an existing loan or wait until the borrower’s position changes, the recommendation should reflect that rather than moving a loan simply to create a transaction.
FAQs
It varies by lender and borrower profile. A larger deposit can improve pricing and reduce LMI.
Potentially. Usable equity may be released subject to valuation and serviceability.
Investment lending can be priced differently depending on lender and repayment type.
That depends on strategy and cash flow. Obtain tax advice where relevant.
Usually not. Rental income is commonly shaded.
Potentially, subject to property value, LVR and servicing.
Still have questions? Speak with our team
Ready to understand your options? Book a Strategy Call with Derwent Finance. We can review your current position, what you want to achieve and which lending pathways may be available.
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General information only. Credit assistance is subject to individual circumstances and lender criteria. Interest rates, fees, lender policy, government schemes and eligibility can change without notice. This website does not provide legal, taxation or financial advice. Content last reviewed: August 2026.
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