Beginner's Guide to Comparing Investment Loans

Choosing an investment loan is a big step, and it is normal to feel a bit nervous about it. The most useful thing to know is that the lowest rate on the page does not always make the right loan, because structure, features and how the loan fits your plans all affect what you pay.

If you live on the Sunshine Coast and are thinking about buying an investment property, this guide walks you through what to compare, in the order that tends to matter most.

What Should You Compare When Choosing an Investment Loan?

Compare the interest rate, the repayment type, the fees, and the features such as offset accounts. Each of these changes what the loan costs you and how much room you have to move.

The interest rate gets the attention, but a small difference in rate can be outweighed by ongoing fees or missing features. Some lenders offer a rate discount, and the size of it depends on your deposit, your lender and your circumstances. A broker can compare lenders across Australia for you, which saves you from ringing around. Our investment loans page explains how we approach this.

The trade-off is that loans with more features can carry higher fees, so it is worth asking what you will genuinely use.

Variable Rate or Fixed Rate: Which Suits an Investor?

A variable rate moves with the lender's pricing, while a fixed rate stays the same for a set period. Variable gives you flexibility, and fixed gives you certainty.

With a variable rate, your repayments can rise or fall, but you may be able to make extra repayments or use an offset account. A fixed rate lets you plan your cash flow, but features can be limited, and you may face break costs if you leave early. Many investors split the loan between the two. A split also comes with a trade-off, because each part has its own rules.

If your fixed term is coming to an end, our fixed rate expiry page can help you plan the next step.

Interest Only vs Principal and Interest: What Is the Difference?

With interest only, you pay just the interest for a set period, so the loan balance does not go down. With principal and interest, each repayment also reduces the loan.

Interest on a rental property loan is generally deductible for the period the property is rented or available for rent, but only the interest part of a repayment is deductible, not the principal. Tax outcomes depend on your situation, so speak with your accountant.

Here is an illustrative example at 6.75% p.a. Consider a buyer with a $600,000 loan. Interest only, that is about $40,500 a year in interest, or roughly $3,375 a month. Over a 30-year principal and interest loan at the same rate, the monthly repayment is about $3,891. The interest-only repayment looks lighter, but the balance has not moved.

Now say the buyer takes five years interest only, then switches to principal and interest. The repayments must then be paid off over the remaining 25 years, so the new monthly repayment is about $4,145, which is higher than the 30-year figure of $3,891. The outcome is that the buyer enjoys lower repayments early on, then needs the cash flow to handle a step up later. Lenders also assess your borrowing on the shorter remaining term, so interest only does not increase how much you can borrow.

How Much Can You Borrow for an Investment Property?

Your investment loan amount depends on your income, your debts, your expenses and the lender's policy. Banks must test your ability to repay at a rate 3.0 percentage points above the loan rate.

Lenders can count rental income, but they generally include no more than 80% of the expected rent, to allow for gaps between tenants. Existing debts, including credit card limits, also reduce what you can borrow. Our borrowing capacity page is a good place to start, and a calculator can give you a rough idea before we talk.

What Does Your Deposit Mean for an Investment Loan?

Borrowing more than 80% of the property value usually means paying Lenders Mortgage Insurance (LMI). The 80% mark is a common lender threshold, not a legal limit.

LMI is paid by the borrower, and the cost depends on the loan size and the loan-to-value ratio (LVR). The trade-off is that LMI lets you buy sooner with a smaller deposit, but it adds to your costs. If you already own a home, you may be able to use equity as your deposit, though each lender has its own rules. Equity you borrow is only tax deductible if the money is used for income-producing purposes, so ask your accountant before you act.

Sunshine Coast Rents and Yields: What the Local Numbers Show

The Sunshine Coast vacancy rate was 0.9% in the June 2026 quarter, per REIQ, which points to a shortage of rental homes. Investors consider how easily a property can be rented, and lenders apply their own rental income policies.

Sippy Downs has a median unit rent of $670 per week and a unit rental yield of 5.02% (data to June 2026), per CoreLogic data via Your Investment Property Magazine. A $2.5 billion CBD transformation is under way in Maroochydore. Higher-priced coastal suburbs like Noosa Heads have lower yields, at 2.68% for houses, so rent covers less of the loan.

Lower yields mean you may need to put in more of your own money each week.

How Negative Gearing Rules Affect Your Loan Choice

From the 2027-28 income year, losses on established residential properties bought after 7:30pm AEST on 12 May 2026 can only be deducted against other residential property income. Properties held at that time keep the current treatment, and eligible new builds can still be negatively geared.

This changes how a rental loss can be used, not whether interest is deductible. If your plan relies on a loss reducing your salary tax, the date you buy and whether the property is a new build really matter. Check your position with your accountant before choosing between an established property and a new build.

Does Refinancing Make Sense for an Existing Investment Loan?

Refinancing can make sense if your current loan has a higher rate, fewer features or no longer fits your plans. It also comes with costs to weigh up.

Those costs can include discharge fees, valuation fees and possible break costs on a fixed loan. A loan health check is a gentle way to see where you stand without committing to anything. If you are comparing a refinance, our refinancing page has more detail.

We know that money decisions are personal, and they often sit alongside family plans and worries about the future. We would love to sit down with you, listen to what you are hoping for, and compare options from lenders across Australia. Call one of our team or book an appointment at a time that works for you through our appointment page.

Frequently Asked Questions