Refinance Investment Property Guide | Lowest Rates

Refinancing an investment property can be a smart financial move, helping investors lower their mortgage repayments, access equity for future investments, or secure better loan terms. However, refinancing isn’t always straightforward—lenders have different criteria for investment properties compared to owner-occupied homes.

In this guide, we’ll walk you through everything you need to know about refinancing an investment property in Australia, including when to refinance, key considerations, and how to find the best loan options.

If you’re considering refinancing, Eden Emerald Mortgages can help simplify the process. As specialist mortgage brokers, they work with investors to find the best refinancing solutions—at no cost to you, as we are compensated by the lender.

Types of Refinancing Options Available in Australia

There are several refinancing options available to Australian investors:

• Rate-and-Term Refinance – Replaces the existing loan with a new one at a lower interest rate or better loan terms.
• Cash-Out Refinance – Allows you to access your property’s equity to fund new investments or renovations.
• Debt Consolidation Refinance – Rolls multiple debts (such as personal loans or credit cards) into your mortgage, potentially reducing overall repayments.
• Fixed vs. Variable Interest Rates – Choose between Fixed rates for stability and predictable repayments, Variable rates for potential savings when market rates drop, or Split loans, combining both for flexibility.

Step-by-Step Process to Refinancing Your Investment Property

Step 1: Assess Your Current Loan

Review your current loan’s interest rate, repayments, features, and fees.

Step 2: Define Your Refinancing Goal

Decide whether you want to lower repayments, access equity, or switch loan types.

Step 3: Compare Lenders and Loan Products

Research different loan options or work with a mortgage broker to find the best fit.

Step 4: Submit an Application

Prepare required documents, including:

• Proof of income.
• Rental income statements.
• Existing loan details.

Step 5: Property Valuation & Loan Approval

The lender will assess your property value and financial position before approving the loan.

Step 6: Loan Settlement & Transition

Once approved, your old loan is paid off, and the new loan starts.

When Should You Refinance an Investment Property?

Refinancing isn’t always necessary, but there are certain scenarios where it makes sense:

• Interest rates have dropped – If current market rates are significantly lower than what you're paying, refinancing can save you thousands in interest.
• Your loan is outdated – If your current loan lacks features like an offset account or a flexible repayment structure, switching can offer better control over your finances. You may also be eligible for cashback when you refinance. See the latest cashback offers here.
• You need access to equity – If your property has appreciated in value, refinancing allows you to tap into that equity for further investments.
• Your financial situation has changed – If your income has increased or your credit score has improved, you may qualify for a more competitive loan.

When NOT to refinance:

• If exit fees or break costs outweigh the benefits.
• If you plan to sell the property soon.
• If your financial situation has deteriorated, making approval harder.

Common Mistakes to Avoid When Refinancing Investment Property

• Overlooking Break Fees – Some lenders charge high exit fees for breaking fixed-rate loans early.
• Refinancing Too Often – Frequent refinancing can lead to excessive fees and negatively impact your credit score.
• Choosing the Wrong Loan Structure – Not all loan features suit investment properties, so make sure you choose wisely.
• Ignoring Tax Implications – Some refinancing moves may affect negative gearing benefits or capital gains tax (CGT). Speak with a tax advisor if unsure.

Tax Implications of Refinancing an Investment Property

In Australia, interest on an investment property loan is typically tax-deductible, but refinancing can affect the amount of deductible interest. If you refinance to access equity for personal use, such as funding a holiday or paying off personal debt, the interest on that portion of the loan may no longer be tax-deductible. Therefore, it's important to clearly define the purpose of the refinanced funds and consult with a tax advisor before making any decisions.

Additionally, refinancing can have implications for capital gains tax (CGT) if you access equity in your investment property. Using the equity for further investments or renovations might affect the property's value, which could impact your CGT liability when the property is sold. Understanding the tax ramifications of refinancing is vital to ensuring you don't face unexpected tax obligations down the track.

FAQs About Refinancing Investment Property

How long does refinancing take?

Typically 4-6 weeks, depending on the lender and property valuation process. If you work with a mortgage broker, they may be able to speed up the refinancing process for you.

Can I refinance with bad credit?

Yes, but options may be limited, and you might face higher interest rates. Speak to a mortgage broker who can help you find the lenders that accept your low credit score.

Will refinancing affect my credit score?

Yes, temporarily, due to lender credit inquiries. However, it generally improves over time if refinancing reduces debt.

What’s the minimum equity required to refinance?

Most lenders require at least 20% equity, but some allow refinancing with LMI.

Conclusion

Refinancing an investment property can be a powerful tool for improving cash flow, accessing equity, and securing better loan terms. However, it’s important to carefully assess your goals, costs, and lender options before making a move.

Eden Emerald Mortgages makes refinancing easy and stress-free—offering expert advice, access to top lenders, and a seamless refinancing process at no cost to you. Get in touch with us by filling out the form below.