Investment property loans differ from owner-occupier loans in several important ways. Lenders assess rental income, apply different LVR limits, and may offer interest-only repayment options tailored to investors.
Interest-Only vs Principal & Interest
Interest-only repayments can improve cash flow in the early years of an investment, allowing you to allocate funds elsewhere. However, you won't build equity through repayments during the interest-only period.
Principal and interest repayments build equity faster and may qualify for lower rates with some lenders.
How Lenders Assess Rental Income
Most lenders use a portion of expected rental income (typically 70–80%) when calculating your serviceability. This means your personal income still plays a significant role in borrowing capacity.
This article is for general information only and does not constitute personal financial advice. Please speak with a qualified finance professional before making decisions based on this content.