Refinancing an investment loan works like any refinance, with extra checks. The lender counts only part of the rent, tests an interest-only loan on the principal and interest repayments that will follow, and prices investment loans above owner-occupied ones. People usually refinance for a lower rate, to release equity for the next purchase, or before an interest-only period runs out. One Ashfield investor’s refinance set out to do two of those at once: five years of interest-only repayments and about $80,000 released for a future deposit.

What changes when the loan is an investment
Item How lenders treat it
Rent Counted after a haircut for vacancies and costs; the share counted varies by lender
Interest-only Assessed on principal and interest over the remaining term, at a buffered rate
Rate Investment pricing, usually above owner-occupied
Maximum loan Often 80% without mortgage insurance; some lenders go higher with it
Tax Interest stays deductible to the extent the borrowing is still for the investment

How much of the rent will a lender count?

Never all of it. Lenders shade rent to allow for vacancies, agent fees and repairs, and the share counted varies; one major bank publishes a shading of only 5%, while many lenders count noticeably less. On a property rented at $700 a week, the difference between lenders can be thousands of dollars of counted income a year, which matters when you are borrowing for the next one. The rental yield calculator shows the gross and net return.

What happens when an interest-only period ends?

Repayments rise because principal starts being repaid over a shorter remaining term. On a $600,000 loan at the 6% example rate, interest-only costs about $3,000 a month; principal and interest over the remaining 25 years is about $3,866. A lender asked for a new interest-only period assesses the loan at the buffered rate over that remaining term, about $5,035 a month at 9%, so the refinance has to pass on those figures, not the interest-only payment. The interest-only repayment calculator shows the jump for your loan, and interest-only home loans covers when lenders allow another period.

Does the negative gearing change affect a refinance?

It can. For an established home bought after 7:30pm AEST on 12 May 2026, rental losses can only offset residential property income and gains from 1 July 2027. Lenders that add back the tax benefit of a negatively geared property may stop doing so for that property from that date, which lowers the income they count. Properties held before Budget night, and new builds, keep the old treatment. The article on negative gearing changes explains who is affected.

Is the interest still tax deductible after a refinance?

Deductibility follows what the money is used for, not which lender holds the loan. Refinancing the same balance keeps the interest deductible. If you borrow extra in the refinance for a private purpose, such as a car or your own home, the interest on that extra part is not deductible, and mixing it into one loan makes the records harder. Keeping separate splits for each purpose avoids that; the guide to split home loans shows how.

Should the investment loan be tied to your home?

Usually not. When one loan is secured by two properties, the lender controls both, and selling or refinancing one becomes harder. Refinancing is a good moment to separate them; see cross-collateralisation. If you are releasing equity for another purchase, the guide to using equity to buy covers the structure.

Questions people ask

Can I refinance an investment property with another lender?

Yes. The new lender values the property, counts the rent after its haircut and assesses all your debts, so compare rent treatment as well as the rate.

Can I refinance an interest-only loan to another interest-only loan?

Often, if you pass the assessment on the remaining principal and interest term at the buffered rate. Some lenders limit the total interest-only period.

Should I fix or stay variable on an investment loan?

It depends on your plans; a fixed rate can carry break costs if you sell. The guide to fixed versus variable sets out the trade-off.

Can I use equity in the investment to buy my own home?

Yes, if the lender approves it, but the interest on that money is not deductible because the purpose is private.

Charles Touma compares investment pricing, rent treatment and interest-only rules across lenders before you move, and structures splits so each purpose stays clear. A free 30-minute call covers your portfolio and the next step. General information only, not tax or credit advice; speak with a registered tax agent about deductions.

Sources: ATO, interest expenses on rental property; ATO, negative gearing and capital gains tax reform; Westpac, broker credit policy summary, checked 20 October 2026.

General information only, not credit, legal or tax advice. Your situation is assessed properly before any recommendation. Government scheme details change; figures are current at the time of writing.