Invest
Refinancing to buy an investment property
Are you planning to buy an investment property but have no clue how to do it?
Refinancing to buy an investment property
While buying an investment property is a good financial opportunity, scraping together the money for a deposit and associated holding costs can be rather difficult, especially if you are also paying off a mortgage. In this situation, refinancing your home loan could be the best way to fund your purchase.
Many people have chosen to refinance their mortgage to buy an investment property due to its financial benefits. If you ultimately choose to rent out your investment property, you can benefit from the rental income and potential capital gain, which can help you repay your home loan or invest in other assets.
Here is a guide on how you can refinance your existing home loan to purchase an investment property.
Why should you refinance your existing home loan?
Refinancing refers to the process of taking out a new loan to pay off your existing loan.
Refinancing is one way to help you buy an investment property. The process involves refinancing your existing mortgage and getting access to your equity to use it as a deposit to buy an investment property.
A deposit is usually required when you take out a home loan to purchase any property. Generally, the rate will be at 20 per cent, but it can also be as low as 5 per cent. If you refinance your existing home loan, you can avoid having to save for this deposit. Most lenders allow you to use the equity in your house as a replacement for your deposit.
Refinancing your home loan to finance your investment property purchase may also allow you to consolidate your debt and lower your financial liabilities.
To learn more about the advantages of refinancing, read here.
The risks of refinancing to invest in a property
Refinancing to have more funds for your investment property can be a good strategy for borrowers. But make sure that you also know the risks associated with it.
Here are some of the risks you need to consider before refinancing your mortgage to buy an investment property:
Market risks. If you choose to rent out your property, you will most likely rely on your rental income to repay your debt. You may not get a substantial income to cover your repayments if your property is situated in a place that has a slow rental price growth or there is not enough demand for it. To prevent this, do your research to ensure that there will be enough demand for your property type. If you are planning to invest in a developing location, see what infrastructure projects are coming up that can help you determine if there will be potential renters in the area.
Refinancing expenses. Finding another lender and refinancing your home loan can be an expensive undertaking. Before you decide to refinance, you need to have an estimate of the total costs involved in the process. You can consult with an accountant and a mortgage broker to get a detailed breakdown of the costs you will incur from exiting your existing home loan. These fees include discharge and government fees. You should also be aware of the expenses associated with setting up a new home loan.
Depreciation in property value. There’s a chance you may find yourself in a worse financial situation if the property falls in value, as it will prevent you from building up further equity. To minimise this risk, make sure that you diligently research the property market. This will help you buy in a location that has potential for capital gain over time.
Unstable rental income. Owning a rental investment property is a great opportunity to earn rental income that you can use to pay off your loan or invest. But having problematic tenants that refuse to pay rent or don’t pay on time can result in financial problems. There are also instances that a tenant would abruptly leave the property without settling their balances. This would mean facing periods where you have no income and you will need to dip into your savings to cover repayments until payment resumes or until you can find a new tenant. You can lower this risk with the help of a property manager who can help you get your property rented by people with a good track record of being a tenant.
Conclusion
If you are planning to buy an investment property, refinancing your home loan may be the best strategy to fund your purchase. However, be mindful about the risks associated with buying an investment property through this process and make sure that you seek professional advice and do your research before taking the next steps.
RELATED ARTICLES
Property
LJ Hooker Lake Macquarie makes a splash with Belmont buy as real estate consolidation looms
LJ Hooker Lake Macquarie’s acquisition of the Belmont office, including its rent roll, is less about shopfronts and more about balance‑sheet resilience. In a market where listings ebb and flow with ...Read more
Property
Twice the demand: the case study behind Melbourne’s first‑home buyer surge
Melbourne has quietly engineered one of Australia’s most consequential housing turnarounds, with first‑home buyer demand running at roughly double the national pace and four of the top five buyer ...Read more
Property
First‑home buyers now anchor Australia’s mortgage growth — but the risk maths is changing
Great Southern Bank’s revelation that nearly one in three of its new mortgages went to first‑home buyers is not an outlier. It is the leading edge of a broader market realignment powered by government ...Read more
Property
Home guarantee scheme shake-up challenges Australia’s housing market players
From 1 October 2025, the expanded Home Guarantee Scheme (HGS) materially widens what first-home buyers can purchase and where. By sharply lifting price caps and relaxing eligibility settings, the ...Read more
Property
GSB’s first‑home buyer play: turning policy tailwinds into market share
Great Southern Bank’s latest results show that nearly one in three of its new mortgages now go to first‑home buyers—evidence of a fast‑moving market reshaped by government guarantees, easing rates and ...Read more
Property
Why investors are fleeing and renters are scrambling in Australia's housing maze
Australia’s rental market is tightening even as individual landlords sell down. New data points to a multi‑year investor retreat tied to higher holding costs and regulatory uncertainty, while prices ...Read more
Property
Australia's 5% deposit guarantee: Unlocking gains while balancing risks in the market share race
Can a bigger government guarantee fix housing access without fuelling prices? Australia is about to find out. The Albanese government’s expanded 5% deposit pathway aims to help 70,000 buyers, remove ...Read more
Property
Australia's bold move the 5% deposit scheme shaking up the housing market
Can a government guarantee replace lenders mortgage insurance without inflating prices or risk? Canberra’s accelerated 5% deposit scheme is a bold demand-side nudge in a supply‑constrained marketRead more
Property
LJ Hooker Lake Macquarie makes a splash with Belmont buy as real estate consolidation looms
LJ Hooker Lake Macquarie’s acquisition of the Belmont office, including its rent roll, is less about shopfronts and more about balance‑sheet resilience. In a market where listings ebb and flow with ...Read more
Property
Twice the demand: the case study behind Melbourne’s first‑home buyer surge
Melbourne has quietly engineered one of Australia’s most consequential housing turnarounds, with first‑home buyer demand running at roughly double the national pace and four of the top five buyer ...Read more
Property
First‑home buyers now anchor Australia’s mortgage growth — but the risk maths is changing
Great Southern Bank’s revelation that nearly one in three of its new mortgages went to first‑home buyers is not an outlier. It is the leading edge of a broader market realignment powered by government ...Read more
Property
Home guarantee scheme shake-up challenges Australia’s housing market players
From 1 October 2025, the expanded Home Guarantee Scheme (HGS) materially widens what first-home buyers can purchase and where. By sharply lifting price caps and relaxing eligibility settings, the ...Read more
Property
GSB’s first‑home buyer play: turning policy tailwinds into market share
Great Southern Bank’s latest results show that nearly one in three of its new mortgages now go to first‑home buyers—evidence of a fast‑moving market reshaped by government guarantees, easing rates and ...Read more
Property
Why investors are fleeing and renters are scrambling in Australia's housing maze
Australia’s rental market is tightening even as individual landlords sell down. New data points to a multi‑year investor retreat tied to higher holding costs and regulatory uncertainty, while prices ...Read more
Property
Australia's 5% deposit guarantee: Unlocking gains while balancing risks in the market share race
Can a bigger government guarantee fix housing access without fuelling prices? Australia is about to find out. The Albanese government’s expanded 5% deposit pathway aims to help 70,000 buyers, remove ...Read more
Property
Australia's bold move the 5% deposit scheme shaking up the housing market
Can a government guarantee replace lenders mortgage insurance without inflating prices or risk? Canberra’s accelerated 5% deposit scheme is a bold demand-side nudge in a supply‑constrained marketRead more
