Investment Loan Rates in 2025: What Property Investors Need to Know
The lending game has changed in 2025. For Australian property investors, it’s no longer enough to simply chase the next opportunity. The finer details of your loan, especially the rate, could decide whether your returns hold up five years from now.
Right now, the Reserve Bank has paused the cash rate at 3.85%, following two cuts earlier this year. More reductions may be on the horizon, which means variable rates could shift again before the year ends.
So if you’re planning a purchase, the real question is: are you choosing the right type of loan, or just focusing on the property?
What Are Investment Loan Rates in 2025?
Buying an investment property with borrowed money isn’t just about the purchase — it shapes your returns for years to come. And lenders know that. Since investment loans carry more risk than regular home loans, banks usually set the interest rates a bit higher. It’s their way of balancing the odds.
Here’s where the averages are sitting in early 2025:
Loan Type |
Typical Rate Range (2025) |
| Fixed Investment Loan | 6.8% – 8.5% p.a. |
| Variable Investment Loan | 7.2% – 9.1% p.a |
| Interest-Only Investment Loan | 7.5% – 9.8% p.a. |
These are general figures; you might see something slightly higher or lower depending on your lender and situation. Whether you’re borrowing against a house or a unit, or choosing an interest-only period, the type of deal you get depends on more than just the base rate.
Fixed vs Variable Investment Loan: Which One’s Right in 2025?
This year, choosing between a fixed or variable investment loan isn’t as straightforward as it once was. With the RBA showing cautious signs of rate easing, some investors are locking in now, while others are betting on flexibility.
Fixed Investment Loan
Pros: Predictable repayments; protection from future rate hikes
Cons: Break fees if you refinance or sell early; limited flexibility
Variable Investment Loan
Pros: Flexibility to make extra repayments; potential savings if rates drop
Cons: Exposure to rate rises; harder to budget
Many investors in 2025 are considering a split loan: part fixed, part variable. It’s a way to hedge your bets in an uncertain market.
What Affects Your Property Loan Rates?
Not all investors pay the same rate, even with the same lender. These are the key factors influencing property loan rates this year:
- Credit Score: A clean track record helps you access lower rates
- Loan-to-Value Ratio (LVR): Borrowing more than 80%? Expect to pay more
- Loan Term: Longer terms may offer lower monthly repayments but higher overall interest
- Serviceability & Existing Debt: Banks don’t just look at your current income. They’ll go through your existing loans, and sometimes even knock down how much rent you say you’ll earn from the property. It’s their way of being extra cautious.
- Property Type: Some lenders treat apartments, rural properties, or commercial assets as higher risk
- Interest Structure: Interest-only loans often carry higher rates than principal-and-interest ones
- Offset Accounts & Redraw: These features may come with slightly higher rates, but can save you more over time
Understanding these levers can help you better compare investment loan rates in context, not just the number on the page.
How to Compare Investment Loan Rates the Smart Way (2025 Edition)
A lower interest rate might look great, but there’s more to the story. Here’s how to compare like a pro:
Check the Comparison Rate
It’s not just about the interest. The comparison rate includes upfront and ongoing fees, giving a clearer sense of the real cost.
Use a Loan Calculator
Before you lock anything in, try plugging your actual loan amount and term into a calculator. It’s surprising how much your repayments can shift with just a small change in interest rate. Tools like online loan calculators or comparison sites won’t give you the full picture — but they’re a decent place to start before you chat with a lender or broker.
Look at Loan Features
Does the loan allow extra repayments or redraws? Offset accounts? These can reduce your interest paid over time, even if the base rate is slightly higher.
Mind the Fine Print
Some lenders offer low “honeymoon” rates that jump significantly after the first year. Read the full product disclosure before signing.
1. Factor in Lenders Mortgage Insurance (LMI)
If your Loan-to-Value Ratio (LVR) is above 80%, you’ll likely be required to pay Lenders Mortgage Insurance (LMI). This protects the lender, not you, and can be a substantial upfront cost that needs to be factored into your total investment.
2. Speak to a Mortgage Broker (Optional)
In 2025, many investors are using brokers to filter through dozens of options, especially when juggling investment loans with owner-occupier debt. A licensed broker can often find loan structures or lenders that suit specific investor strategies.
Final Tips Before You Lock It In
- Watch the RBA: Keep an eye on cash rate decisions—they directly influence investment loan rates.
- Think Long-Term: Are you planning to refinance, renovate, or sell? Choose flexibility if your strategy may change.
- Don’t Just Chase the Lowest Rate: Sometimes, a loan with better features (or lower fees) wins in the long run.
- Understand the Tax Angle: Beyond the interest rate, savvy investors also consider the tax implications. In Australia, interest paid on an investment loan is generally tax-deductible against your rental income, which can significantly impact your overall return. This is often referred to as ‘negative gearing’ if your expenses outweigh your income, or ‘positive gearing’ if they don’t.
- If you’re unsure, take your time. A small percentage difference can mean tens of thousands over a 25-year term.
Bottom Line
The gap between a good deal and a bad one might only be half a percent, but over the long term, that adds up fast. Fixed, variable, or somewhere in between—what matters is finding a loan that fits your investment plan, not just your monthly budget. Take the time to compare properly. A smart choice now can save you more than you think down the line.