When you compare investment loans, the headline rate matters, but so do five other things that can change your returns: the package fee and what it covers, offset and split options, interest-only terms, the lender’s credit policy, and how easy the loan is to restructure as your portfolio grows. The best investment loan is the one with the lowest total cost for your strategy, not just the lowest rate.
1. Start with the rate you’ll actually get
Investor rates are higher than owner-occupier rates. As at 2 October 2026 the average investor variable rate was 6.89% and the lowest advertised around 5.94% (Canstar, $600,000 loan, 80% LVR, principal and interest). Interest-only investor rates are usually higher again. Make sure you compare rates for your actual LVR and repayment type. See investor home loan rates for why the gap exists.
2. Use the comparison rate to filter, then do your own sums
The comparison rate helps spot fee-heavy loans, but it’s based on a $150,000 loan. For a typical investment loan of $500,000 or more, an annual package fee matters far less than the comparison rate suggests. Calculate the total cost over the years you’ll hold the loan. See the true cost of a home loan.
3. Weigh the package fee against the discount
Package loans usually charge an annual fee, often around $400, in exchange for a rate discount and features such as an offset account. For investors, packages are often better value than for owner-occupiers because:
- One annual fee can cover several loans and splits
- The discount usually applies to every loan in the package
- The offset account suits investors (see below)
Quick test: a 0.20% discount on a $600,000 loan saves about $1,200 a year. Against a $400 fee, you come out ahead on any loan above roughly $200,000.
4. Prioritise offset over redraw
An offset account lets you hold cash against the investment loan without permanently reducing the balance. That keeps the loan, and its deductible interest, intact if you later use the cash for something else. Redrawing extra repayments from an investment loan for private use can reduce what you can claim. Check that the offset is 100%, attaches to the split you want, and is available on interest-only loans if you plan to use them.
5. Check the interest-only terms
If you plan to use interest-only repayments:
- Compare the interest-only rate, not just the principal and interest rate
- Check the maximum interest-only period (often up to five years for investors)
- Ask how the lender assesses a future interest-only extension
- Check what repayments would be when the loan switches to principal and interest
6. Look at the lender’s credit policy
Two lenders can quote similar rates but lend very different amounts:
- How much rental income they count (many count around 70 to 80%)
- How they treat existing debts and your other properties
- Their serviceability rate (your rate plus at least the 3% APRA buffer)
- Any postcode or property-type limits
This matters most if you plan to buy again. A lender with flexible policy today can be worth more than a slightly lower rate.
7. Check flexibility as your portfolio grows
- Splits: can you create separate splits for each purpose and property?
- Portability: can you move the loan to another property?
- Security: avoid cross-securing several properties to one lender where possible
- Fees to restructure: some lenders charge for every change
For more on keeping costs down over time, see how to cut your investment loan costs and home loan features worth comparing.
A comparison checklist for investors
| Check | Why it matters |
|---|---|
| Investor rate for your LVR and repayment type | The rate you’ll actually pay |
| Total 5-year cost including fees | Shows the real price |
| 100% offset available on your splits | Protects deductibility and flexibility |
| Interest-only rate and maximum period | Drives cash flow |
| Rental income shading and buffer | Drives how much you can borrow next time |
| Split and restructure fees | Cost of future changes |
Frequently asked questions
Are package home loans worth the annual fee?
Often, for investors. If the package discount on your loans is worth more than the fee, which on a 0.20% discount happens for loans above roughly $200,000, the package is cheaper. It’s even better value when one fee covers several loans and includes an offset account you’ll use.
Should an investment loan have an offset account?
In most cases, yes. An offset lets you reduce interest while keeping the loan balance, and its deductibility, intact. Paying extra into the loan and redrawing it later for private purposes can reduce the interest you can claim.
How do I compare interest-only investment loans?
Compare the interest-only rate itself, the maximum interest-only period, the lender’s policy on extensions, and what your repayments would become when the loan switches to principal and interest. Interest-only rates are usually higher than principal and interest rates.
Sources
- Canstar, Average home loan interest rates, as at 2 October 2026
- APRA, Macroprudential policy settings, May 2026
- Australian Taxation Office, Interest expenses on rental properties
General information only. It does not consider your objectives, financial situation or needs and is not credit or tax advice.