The fundamental difference
A home loan is for a property you live in. An investment loan is for a property you plan to rent out or sell for profit. Simple enough — but the differences go a lot further than that.
Lenders generally view investment loans as slightly higher risk. If things get tough financially, borrowers are more likely to protect their home than their investment property. That risk gets priced into the loan.
What that means in practice
Investment loans typically come with:
- •Higher interest rates than equivalent owner-occupied loans
- •Lower maximum LVRs — meaning you usually need a larger deposit of 10–20% or more
- •Potential tax deduction opportunities on interest and eligible expenses — something you don't get on a home loan
Side by side comparison
| Home Loan | Investment Loan | |
| Interest rates | Generally lower | Generally higher |
| Deposit needed | As low as 5% with govt schemes | Typically 10–20%+ |
| Max LVR | Up to 95% with LMI | Often capped at 80–90% |
| Tax deductions | Not available | Interest & eligible costs may be deductible |
| Stamp duty | FHB concessions often available | Investor concessions generally unavailable |
| Interest only | Less common | Commonly used to manage cash flow |
Why this matters before you apply
Understanding these differences shapes everything — how much you can borrow, what your repayments look like, and how you structure the loan. Getting the structure wrong can cost you flexibility down the track.
That's exactly where a broker earns their keep. We know which lenders are most competitive for investors, how they assess rental income, and how to set up your loans so buying property two and three is straightforward when the time comes.
Ready to run the numbers on your situation? Book a free chat with Kick Finance.
