Refinance Investment Property Loans
Refinancing an investment property loan can lower your interest rate, unlock equity for future purchases, or optimise your portfolio's cash flow.
Should I refinance my investment property loan?
Refinancing an investment property loan makes sense if it reduces your overall borrowing costs, improves rental yield, or aligns with your broader portfolio strategy. Securing a lower interest rate decreases monthly repayments and boosts net cash flow, while switching repayment types—such as moving to interest-only—can temporarily optimise tax effectiveness and free up capital for other investments.
Investors also refinance to release built-up equity after capital growth. If your Loan-to-Value Ratio (LVR) is under 80%, you can access equity without incurring Lenders Mortgage Insurance (LMI). This released capital can fund a deposit for another property purchase, pay for value-adding renovations, or cover maintenance costs across your portfolio.
Before proceeding, consider the upfront costs against potential long-term savings. Exit fees, discharge charges, and loan setup costs can add up, while fixed-rate break costs may be substantial. Lenders will also re-assess your serviceability using shaded rental income, higher interest rate buffers, and your total existing debt.
Navigating lender policies requires comparing rates, tax flexibility, and loan features across the market. A Lonix broker can compare lenders, evaluate comparison rates, and properly structure your loan to support your broader property portfolio goals.
Related questions
- Can I refinance an investment loan to interest-only?
- Yes, property investors frequently refinance to an interest-only structure to minimize short-term repayments and maximize tax-deductible interest expenses. Lenders will require a full serviceability assessment using standard interest rate buffers to approve this setup.
- How does equity cash-out work on an investment property?
- Equity cash-out allows you to borrow against the increased value of your property, provided your total borrowing remains under 80% LVR to avoid LMI. The released funds are typically set up in a separate loan account to keep investment funds cleanly tracked for tax purposes.
- Will refinancing an investment property affect my tax deductions?
- Refinancing itself does not change tax deductibility, as interest remains deductible if the loan proceeds are used for income-producing assets. However, combining personal debt and investment debt into one loan can create tax complexities.
- What LVR is ideal when refinancing an investment loan?
- Aiming for an LVR of 80% or lower is ideal because it avoids Lenders Mortgage Insurance (LMI) and unlocks access to lower interest rates. Higher LVR refinances are possible up to 90%, but they incur additional costs and strict serviceability testing.