Investment loan rates typically sit 0.2 to 0.6 percentage points above owner-occupier rates. Interest-only repayments add another 0.1 to 0.3 percentage points on top of that. Your loan to value ratio (LVR) and which lender you choose move the number more than most investors expect. Two people can buy the same Brisbane property and end up on meaningfully different rates, purely based on how the loan is structured.
Why are investment loan rates higher?
Lenders price investment loans higher because regulators require it. The Australian Prudential Regulation Authority treats investor lending as higher risk for the banking system as a whole, so banks hold more capital against these loans. That cost gets passed on through the rate.
There's also a behavioural reason. Owner-occupiers live in the home and are less likely to walk away from repayments. Investors are more sensitive to cash flow and rental yield, and more likely to sell or refinance if the numbers stop working. Lenders build a margin in for that.
The gap between owner-occupier and investment home loan rates has narrowed and widened over different cycles, depending on regulatory settings and how much investor lending each bank wants on its books at the time. It's not a fixed number. It moves.
How much more is interest-only?
Interest-only investment loans usually carry a rate 0.1 to 0.3 percentage points above the same loan on principal and interest. Lenders see interest-only lending as higher risk again, because the loan balance isn't reducing and the borrower is more exposed if property values fall or rents soften.
Combine occupancy loading and interest-only loading and an interest-only investment loan can sit close to a full percentage point above an owner-occupier principal and interest loan on the same property. That's a real difference in monthly repayments, and it's worth running through a rate check before you commit to a structure.
What LVR gets the best investment rates?
Lenders reserve their sharpest investment rate tiers for LVRs at or below 70 to 80%. Once you borrow above 80% of the property value, most lenders add a pricing loading on top of the standard investment margin, separate from any lenders mortgage insurance premium.
This is where Brisbane investors often leave money on the table. A buyer who can find an extra 5 to 10% deposit, or who cross-collateralises equity from an existing property, can sometimes drop into a cheaper pricing tier. Whether that trade-off is worth it depends on your overall strategy and how much flexibility you want to keep. This is a structuring decision, not general advice, so talk it through with a broker or your accountant before you decide.
Principal and interest or interest-only for an investment loan?
Principal and interest reduces your loan balance and gets you the lower rate. Interest-only keeps monthly repayments lower and can free up cash flow, which some investors use to pay down non-deductible debt like their own home loan faster, or to hold a buffer for vacancies and maintenance.
There's no single right answer. It depends on your income, your other debts, how long you plan to hold the property, and what negative gearing means for your tax position. A common approach is interest-only for a set period, then a switch to principal and interest once the strategy shifts from cash flow to equity building. This is a decision worth making with your broker and accountant together, not off a rate comparison alone.
How do Brisbane investment yields interact with rates?
Rental yield and interest rate sit on opposite sides of the same equation. In parts of South East Queensland, houses in more affordable corridors have been returning gross yields in the order of 4 to 5%, though this varies suburb by suburb and moves with both rents and prices, so treat it as a general guide rather than a number to bank on.
When your rate loading is higher, whether from occupancy, interest-only, or LVR, your yield needs to work harder to keep the property cash flow neutral or better. This is exactly why the rate you actually get matters more for an investment property than for a home you live in. A 0.3 percentage point difference on an investment loan can be the gap between a property that roughly funds itself and one that draws on your income every month. If you're weighing this up against buying where you live and renting elsewhere, our rentvesting guide and investment property guide walk through the trade-offs in more detail.
How do I get a sharper investment rate?
Three levers tend to matter most.
First, shop across lenders rather than defaulting to your existing bank. A broker who works across 60+ lenders can see which ones are actively competing for investor business this month, because appetite shifts regularly as banks manage their investor lending caps.
Second, reprice with your current lender before you refinance elsewhere. Existing customers with clean repayment histories can often get a better rate just by asking, and it costs nothing to check.
Third, think about LVR positioning before you settle, not after. Structuring your deposit and any cross-securitisation to land in a lower LVR tier can lock in a better rate for the life of the loan, rather than trying to refinance your way there later.
| Factor | Typical rate impact | |---|---| | Investment vs owner-occupier | +0.2 to +0.6 percentage points | | Interest-only vs principal and interest | +0.1 to +0.3 percentage points | | LVR above 80% | +0.2 to +0.5 percentage points | | Package vs basic loan | Varies by lender, often offset by fee waivers |
Current figures move weekly, so treat all of the above as relative differentials rather than numbers to quote back to a lender. For live pricing against your actual numbers, run our rate check or get in touch for a call. You can also read more about our investment loans service or compare against home loan rates generally.
This article is general information only and does not consider your personal circumstances. It's credit assistance, not financial advice. Speak with a broker or financial adviser about what applies to you.
Want live investment rates for your numbers? Run our free rate check or book a call with Tom Smith at Kookaburra Finance. We're FBAA members, accredited with 60+ lenders, and there's no cost to you.