Refinance Investment Property in Australia
Think of your investment property as a high-performance vehicle — when you bought it, everything was tuned for success. But years later, is it still running on those original settings?
Many property investors are sitting on assets that could be working harder. Left unoptimised, such loans can silently cost thousands in “loyalty tax” while keeping valuable equity locked away.
The investment-loan market is showing signs of real movement: in the June quarter 2025, there were over 49,000 new investment-property loans approved — a rise of 3.5% from the previous quarter. Meanwhile, the average new investment loan size sits at AUD $674,259.
Refinancing investment property is the dividing line between passive ownership and strategic portfolio growth. In this guide, you’ll discover the key triggers for when to act, how to refinance investment property, the costs involved, and the tax implications you can’t afford to ignore. Explore whether refinancing your investment property could suit your goals.
Can You Refinance Investment Property in Australia?
Yes, you can refinance an investment property loan in Australia. However, the process is more complex than refinancing a home you live in.
Lenders assess investment properties with a different level of risk, and the Australian Taxation Office (ATO) has specific rules about tax deductions.
The strategic goals for refinancing an investment property are also different, focusing on investment returns rather than just managing household budgets.
The Investment Property Refinancing Process
Refinancing an investment property is a full re-application for a loan. You should approach it with the same diligence as your original application.
Lenders will conduct a complete reassessment of you, your property, and the current market.
This process ensures the lender is comfortable with the risk, which may have changed since your initial loan. Following a clear, step-by-step process will help you navigate the application smoothly and secure a loan that is right for your goals.
1. Define Your "Why"
First, get clear on your primary reason for refinancing. Is it to lower your rate, access equity, consolidate debt, or switch to an interest-only structure?
Your specific goal will determine the right loan product and lender for you.
After clarifying your “why,” conduct a full financial health check, gathering details on all income, expenses, assets, and liabilities to prepare for your application.
👉 Also see: Why Banks Love It When You Refinance Your Home Loan
2. Calculate Your Equity & LVR
Your Loan-to-Value Ratio (LVR) is a key metric for lenders. It measures your loan amount as a percentage of your property’s value and helps them assess risk.
The formula is: LVR = (Loan Amount / Property Value) x 100.
You can estimate your property’s value using online tools or by asking local real estate agents. The new lender will conduct their own formal valuation later.
Most lenders are comfortable with an 80% LVR, which allows you to calculate your “usable equity”.
For example, if your property is worth $800,000 and your loan is $400,000, your usable equity up to an 80% LVR is $240,000 ($640,000 – $400,000).
3. Compare Lenders and Loans
Look beyond the headline interest rate. The comparison rate is a more accurate measure of a loan’s true cost, as it includes most standard fees and charges.
Also, evaluate loan features that are valuable for investors, such as offset accounts and redraw facilities.
Given the complexity of investment loan refinancing, working with a specialist mortgage broker can be a huge advantage. They understand the nuances of different lender policies and can find products you might not be able to access directly.
👉 Also see: Repricing vs Refinancing Your Mortgage in Australia
4. Submit Your Application
This is your formal request for credit. You will need to provide extensive documentation to prove your financial standing.
This typically includes recent payslips, the last two years of tax returns, bank statements, proof of rental income, and statements for all existing debts.
The lender will assess your ability to repay the loan (serviceability) and run a credit check. Be aware that each formal application creates a hard inquiry on your credit file, so avoid submitting multiple applications at once.
5. Valuation and Formal Approval
Once your application is conditionally approved, the new lender will order a formal valuation of your investment property. This is to confirm its market value and your final LVR.
After a successful valuation and final credit assessment, the lender will issue an unconditional approval. You will then receive the formal loan offer and mortgage documents to review and sign.
👉 Learn more: Property Valuations & Appraisals for Refinancing
6. Settlement
Settlement is the final stage of the process. Your new lender provides the funds to pay out the old loan with your previous lender.
The old mortgage is discharged, and the new mortgage is registered against your property’s title.
At this point, the refinancing is complete, and you’ll start making repayments on your new loan.
👉 Resources for you:
Costs vs Benefits of Refinancing Your Investment Property
Refinancing an investment property isn’t free. The upfront costs can range from a few hundred to several thousand dollars.
A detailed cost-benefit analysis is essential to ensure that the long-term savings or strategic gains will outweigh the initial expense.
Failing to do this calculation can lead to a decision that costs you money over the long run. Understanding the potential fees and calculating your break-even point will tell you if refinancing is a financially sound move for your specific situation.
Here are some of the common fees incurred when you refinance investment property in Australia.
| Fee Type | Description | Estimated Cost (AUD) |
|---|---|---|
Discharge Fee | An admin fee from your old lender to close your account. | $150 – $500 |
Application Fee | A fee from the new lender to set up the loan (often waived). | $0 – $1,000 |
Valuation Fee | The cost for the new lender to have your property valued. | $100 – $600 |
Government Fees | State government fees to discharge and register the mortgage. | Varies by state |
Break Costs | A significant penalty for refinancing a fixed-rate loan early. | Can be thousands. |
Ongoing Fees | An annual package fee for loans with extra features. | $0 – $395 annually |
Lenders Mortgage Insurance (LMI) | Typically required when borrowing more than 80% LVR. | Can be thousands. |
To see if refinancing is worthwhile, you need to find your break-even point. This is when your cumulative monthly savings equal the total upfront costs.
The calculation is simple: Months to Break Even = Total Refinancing Costs / Monthly Savings.
For example, if your total upfront costs are $1,500 and your new loan saves you $150 per month, your break-even point is 10 months. If you plan to sell the property before this point, you will make a net loss from refinancing.
👉 Learn more: How Much Does It Cost to Refinance a Home Loan?
AU Expats—Do You Qualify for Investment Property Refinance?
- Struggling to weigh the costs and benefits from overseas? As an Australian expat, complex lender policies can make you miss out on the best deals, leaving you unsure if refinancing is worthwhile.
- At Odin Mortgage, we specialise in expat mortgages. We provide tailored recommendations to help you navigate the complexities and qualify for the best possible rates, ensuring your decision is both clear and profitable.
- Let our team assesses your eligibility today.
- Do you qualify for investment property refinance?
Refinancing Investment Property: Tax Implications in Australia
The tax deductibility of your refinancing costs is governed by one simple rule from the Australian Taxation Office (ATO): the “purpose test”.
The ATO determines deductibility based on what the borrowed funds are used for, not the asset used as security.
Misunderstanding this principle is a common and costly mistake for investors. Getting this right is crucial for maximising your tax-deductible expenses and staying compliant.
This is especially important when doing a cash-out refinance, where you borrow extra money. The purpose of those extra funds will determine whether the interest on them is deductible.
The ATO "Purpose Test"
The purpose test is the most important concept to understand. If you use borrowed funds to generate income, the interest is generally tax-deductible.
This means if you refinance your family home and use the equity to buy an investment property, the interest on that portion of the loan becomes deductible.
This is because its purpose is to produce assessable income, even though the loan is secured against your non-deductible home. Understanding this allows for strategic investment property refinancing.
The Danger of Mixing Funds
Never mix funds for private and investment purposes in the same loan account.
If you use a single redraw facility for both investment expenses and personal spending, you create an accounting nightmare.
This is a high-risk strategy that can easily lead to errors and ATO disputes. The recommended best practice is to structure your loan correctly from the start.
Use separate loan accounts or “splits” for each distinct purpose to keep things clean and compliant.
Which Refinancing Costs Are Tax Deductible?
The tax treatment of refinancing fees depends on the cost. Some can be claimed immediately, while others must be spread over five years.
| Cost / Fee | Tax Treatment | How to Claim |
|---|---|---|
Application / Establishment Fees | Borrowing Expense | Deductible over 5 years (if total borrowing costs > $100). |
LMI | Borrowing Expense | Deductible over 5 years. |
Valuation & Broker Fees | Borrowing Expense | Deductible over 5 years. |
Discharge & Break Costs | Borrowing Expense | Generally deductible in the year incurred. |
Stamp Duty (on original purchase) | Capital Cost | Not deductible. Added to cost base to reduce CGT on sale. |
👉 We can also help you with your Australian Tax Return Preparation.
CGT Considerations
Capital Gains Tax (CGT) is a tax on the profit you make when you sell an asset. The profit is calculated by subtracting the property’s “cost base” from its sale price.
Many initial costs that aren’t deductible against rent, like stamp duty and legal fees, are added to this cost base. This reduces your taxable capital gain and, therefore, the CGT you’ll pay when you eventually sell. This makes it vital to keep meticulous records of all property-related expenses for the entire time you own it.
👉 Also see: How Much Is Property Tax in Australia for Non-Residents & Foreigners?
When Is the Right Time for Investment Loan Refinancing?
Certain market shifts or personal financial milestones act as clear signals that it’s time to review your current loan and explore better options.
Acting at these key moments can save you thousands and unlock strategic opportunities.
Recognising these triggers allows you to be proactive rather than reactive. Whether it’s avoiding a rate hike, capitalising on property growth, or aligning your loan with new goals, the right timing ensures you get the maximum benefit from refinancing your investment loan.
Your Fixed-Rate Period is Ending
This is one of the most logical times to consider refinancing. Lenders often roll your loan onto a much higher standard variable rate when a fixed term ends.
By preparing to refinance before this happens, you can avoid costly break fees that apply during the fixed term.
It’s the perfect chance to shop around for a new competitive rate or a loan structure that better suits your current needs without being penalised.
👉 Learn more: Can You Refinance a Fixed Loan? Fixed Rate Mortgage Refinance
Your Property's Value Has Surged
A significant increase in your property’s market value means you have more equity. This is a prime opportunity to refinance and access that capital.
This newly created equity can be the key to your next investment. You can use it as a deposit to grow your portfolio without having to save for years.
It’s a powerful way to leverage the success of one asset to acquire another.
Your Financial Goals Have Changed
Life events can change your financial landscape. A salary increase or a shift in your investment strategy are valid reasons to reassess your loan.
Perhaps you’ve moved from a passive “buy and hold” approach to a more active acquisition phase.
Your loan structure must support your current financial capacity and future ambitions. Ensuring your loan aligns with your goals is a core part of strategic portfolio management.
The Market Has Shifted
Major changes in the economy can create refinancing opportunities. This includes movements in the RBA cash rate or changes in banking regulations.
A falling rate environment is a chance to lock in savings, while a rising rate environment might prompt you to fix your rate for certainty.
Similarly, when regulators like the Australian Prudential Regulation Authority (APRA) ease lending rules, it can suddenly make refinancing more attractive or accessible.
👉 Learn more: Should I Refinance My Mortgage After RBA Rate Cuts?
You've Had the Same Loan for 2+ Years
Loyalty rarely pays in the mortgage world. Lenders consistently offer better deals to attract new customers, meaning there’s often a “loyalty tax”.
If your investment loan has been untouched for more than two years, you’re almost certainly paying a higher interest rate than you need to.
Regularly reviewing your loan every 12-24 months is a simple yet effective habit for any serious property investor.
👉 Also see: Strategic Refinancing Tips for Australia
👉 Learn more: When to Refinance Your Mortgage in Australia
Australian Expats Refinancing an Investment Property from Abroad
For Australian expats, refinancing an investment property back home presents unique challenges.
The main hurdle isn’t your citizenship, but how lenders verify and assess income earned in a foreign currency.
Successfully refinancing as an expat often means working with specialist lenders or brokers who understand these specific policies.
The Unique Challenges for Expats
Navigating lender policies is the first challenge. Many mainstream Australian banks have very restrictive policies for expats, or no appetite for it at all.
The biggest challenge is foreign currency risk. Lenders worry that exchange rate shifts could make the loan unaffordable.
This risk is the main reason for their conservative assessment policies, which include stringent verification of all foreign income documents.
How Lenders Shade Foreign Income
This is the most important concept for expats to understand. Lenders will not use 100% of your gross foreign income in their serviceability calculations.
They will discount your income by 10-40% to buffer against currency fluctuations. The size of this discount depends on the stability of the currency you earn in.
“Tier 1” currencies like USD, GBP, and SGD receive a smaller discount, while income from less stable currencies may be shaded more heavily or not accepted at all.
Borrowing Limits and Documentation
LVR limits can also be different. While some specialist lenders may offer up to 90% LVR, many will cap it at 80%, especially for self-employed applicants. If you live overseas, lenders generally cap lending at 80% of the property value, and Lenders Mortgage Insurance is generally not available to non-residents; policy varies by lender.
You’ll need to provide a comprehensive set of documents, including your employment contract, recent payslips, and bank statements showing salary credits.
The situation gets even more complex if you’re borrowing with a non-citizen spouse, as this may trigger stricter foreign investor policies and a lower LVR.
👉 Learn more: Documents Required for Refinancing in Australia
The Importance of Specialist Advice
Refinancing as an expat is a specialist field. Your tax situation as a non-resident is also more complex, with different rules for rental income and CGT.
Given these complexities, engaging with professionals is non-negotiable.
A mortgage broker who specialises in expat lending can find the right lender for you, while a tax advisor specialising in expat affairs can provide crucial guidance on structuring your finances to be compliant and tax-effective.
👉 Check out: Refinance Mortgage Broker for Australian Expats
While it’s definitely achievable, it requires navigating a niche area of lending where lenders are very conservative about foreign income.
FAQs when You Refinance Investment Property in Australia
Here are the commonly asked queries when you refinance investment property in Australia.
Can I refinance my investment property in Australia?
Yes, it’s possible to refinance an investment property loan in Australia. However, the process is more complex than for an owner-occupied home.
Lenders use a different risk assessment, and specific ATO tax rules apply.
Can I pull equity out of my investment property?
Yes, you can pull equity out of an investment property, typically through cash out refinancing. This converts your on-paper wealth into usable capital.
Lenders often allow you to borrow up to 80% of the property’s value to access these funds.
👉 Learn more: Cash Out Refinance: Access Your Home Equity
How soon can I refinance my investment property?
While you can theoretically refinance at any time, it’s often unwise to do so in the first 1-2 years due to high setup costs.
The best time is after you’ve built enough equity to have an LVR of 80% or less, which helps you avoid paying LMI again.
If your loan is on a fixed rate, wait until the fixed period ends to avoid expensive break fees.
👉 For more information, check out: How Soon Can You Refinance a Mortgage?
Will refinancing my investment property affect my credit score?
Yes. A refinance application is a new request for credit, resulting in a hard inquiry on your credit report. It can cause a small, temporary dip in your score.
Making multiple applications to different lenders in a short period can have a more significant negative impact, as it may signal financial stress to lenders.
👉 Learn more: Does Refinancing Affect Your Credit Score in Australia?
What refinance options are available?
Key refinance options include rate and term, cash out, cash in, debt consolidation, and fast refinance. They are classified based on strategic outcomes.
👉 Learn more: Types of Refinance in Australia
A successful investment property refinance is one that aligns with your long-term financial goals and is structured correctly from the outset. By leveraging expert advice, you can make an informed decision that enhances your portfolio and moves you closer to your wealth creation goals.
AU Expats—Ready to Secure a Better Deal?
- The path to growing your investment portfolio can seem complex and lonely when you're an expat, often leading to inaction.
- At Odin Mortgage, we're more than just a one-off transaction. We provide specialised, ongoing support for your entire investment journey, simplifying the refinance process for Australian expats.
- Let us partner with you to achieve your long-term property goals.
- Contact our investment refinance specialists
Key Takeaways
- You can refinance investment property, but it’s more complex than a home loan due to different risk and tax rules. ⬆️
- The investment refinancing process is a full loan re-application, from defining goals and comparing loans to valuation and settlement. ⬆️
- Weigh the upfront costs against the long-term benefits to ensure refinancing your investment property is a financially sound decision for you. ⬆️
- Tax deductibility depends on the investment loan’s purpose, not the asset used as security, per the ATO’s “purpose test”. ⬆️
- Commit to refinancing your investment loan when your fixed rate ends, property value surges, your financial goals change, or the market shifts. ⬆️
- Expats can go about refinancing investment property, but face challenges with lenders who are conservative about foreign income and currency risk. ⬆️
See What You Qualify For
Get Immediate Insights on Your Mortgage Eligibility Discover your mortgage eligibility instantly"*" indicates required fields
