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Investment properties

Owning an investment property is a popular way for many Australians to build wealth and their prospects for a financially secure future.

You should see a rental property as a long-term investment and seek professional advice about choosing the right property, the costs involved and how to set a fair and reasonable rent.

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Investment property loans

An investment property loan is much the same as an ordinary residential mortgage. However, most investment loans are offered at a fixed rate for a period of between one and five years – and are generally interest only.

Having a fixed rate means your mortgage repayments will remain constant. This makes it easier to plan your finances.

It is important to find the right investment property loan in order to minimise costs and maximising the tax benefits.

Some things to consider:

  • Investment loans can be ‘packaged’ along with your residential home, and in doing so banks are able to offer better rates and lower fees.
  • There are also investment loans that do not have an establishment fee or service fees.
  • At the end of the fixed rate term, usually five years, some loans automatically revert to the standard variable rate.
  • Some lenders will give you the option of entering a new fixed rate period.

Your Home Loan Republic broker knows all the ins and outs of sourcing the best possible investment property loan to meet your current financial needs.

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Understanding gearing

The term gearing is used to describe the borrowing of funds to be used for investment in property or shares.

There are two forms of gearing:

Negative gearing

Applies when the costs of servicing your investment are higher than the income you receive.

For example, if the repayments on your investment property loan, plus council rates and maintenance costs add up to more than the return on rental, your investment property will be negatively geared.

There are tax benefits to being negatively geared. Taking the long-term view, the value of the property could increase more quickly than the costs which could result in a significant capital gain.

However, negative gearing has its risks and expert advice should be sought before you commit to it.

Positive gearing

Occurs when the cost of servicing your investment is lower than the rent it generates. This usually happens when rents are high and interest rates are low.

How a Home Loan Republic broker can help

The team at Home Loan Republic is well versed in finding the best investment property loan for individual clients. We can also assist with taxation and financial planning strategies via our associates. Call to make an appointment or we can come to you and talk things over.

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What are the benefits of owning an investment property?

Regular income

Rent from an investment property is usually paid fortnightly and represents a regular income stream. It can even be used to repay the loan.

Tax benefits

Owners of rental properties are entitled to tax deductions on a variety of expenses.


Property is a reasonably secure long-term investment and, unlike shares, is a solid and visible asset.

Low risk

Investing in property is considered less risky than some other investments such as shares, cash or managed funds.


Housing stock in Australia consists of units, villas, town houses, apartments, single and multi-storey houses in a variety of rural, suburban and city locations. This means there is a vast choice of properties and process.


Property prices usually rise over the long term so you can sell your investment property in the future to help fund retirement.

Portfolio potential

Building equity in your investment loan allows you to purchase other properties and build up a profitable portfolio.

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Get Your Free Home Loan Health Check

At Home Loan Republic, we regularly save our clients thousands of dollars by assessing their current home loan situation and taking advantage of better deals. Arrange your own Home Loan Health Check today and reap the benefits.

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