Traditionally, home loan interest rates on investment properties are between 0.50% and 1.5% higher than an owner-occupied home loan, but now a lender is offering discounted interest rates for investment properties.
With the Reserve Bank of Australia increasing the cash rate for the fifth consecutive month, many investors are looking for ways to reduce their investment property costs. Whilst increasing rent might be an option for those who have tenants nearing the end of their lease, for many investors increasing rent isn’t a viable option.
The alternative is to look at ways to reduce the operating costs of the investment property, starting with the largest cost – the mortgage.
Investment property mortgage interest rates
Investment property mortgage interest rates are always higher than an owner-occupied home loan interest rate and depending on the structure, Principal & Interest or Interest Only, the difference can be up to 2% higher than a standard owner-occupied home loan interest rate.
Interest only repayments on an investment property mortgage is one way to reduce the interest rate, but few investors know that there are lenders who will reduce an investment interest rate to owner occupied levels if they also refinance their home loan.
Bundle your owner occupied and investment loans to reduce your interest rate
One lender in particular is offering owner occupied interest rates for investment properties when you refinance both your owner-occupied and investment properties to them.
All the loan portions and sub accounts will receive owner occupied pricing.
And if the LVR (loan to value ratio) is below 80%, you can receive an even bigger discount on the interest rates.
The key to minimising the impact of future interest rate rises is to lower the starting point of your interest rate, so if you’re currently paying high interest rates for your investment property, now might be the time to review your options.
To find out more about this product, give the team at Mint Equity a call on 02 4340 4847.