Investment Loans

Investment property loans and loans for people who live in their own homes are a bit different. Investment property loans usually have higher interest rates because they're seen as riskier. And if you already own a home, you might be able to use some of its value (called equity) to help with the deposit on another property.

Some investors pick interest-only loans for their investment properties. With these loans, they only pay the interest part each month, not the actual loan amount. This lasts for a fixed time, and then they start paying off the loan amount too.

Remember, interest-only loans usually have higher interest rates and end up costing more overall because you're not reducing the loan amount. But they might help you get more tax deductions or cut expenses for a while.

The amount of deposit required varies depending on the lender and the property's value. Generally, you'll want to aim for a 20% deposit to steer clear of paying lenders mortgage insurance (LMI). Additionally, you can often use the equity from another property as part of your deposit.

Negative gearing happens when the income from your investment property is lower than the interest payments and expenses you have to cover.

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You might qualify for a tax deduction on various expenses related to your rental property, such as body corporate fees, tenant advertising costs, insurance, land tax, gardening and cleaning expenses, and council and water rates. Review the ATO's rental property guide for potential deductible items, and remember to seek advice from your tax advisor for further clarification.