Investment vs Owner-Occupier Loans: What's the Difference?
Whether you're buying a home to live in or an investment property, the loan is structured differently. Knowing the difference helps you choose the right option and avoid paying more than you need to.
Interest rates
Investment loans typically carry slightly higher interest rates than owner-occupier loans, because lenders see them as higher risk.
Repayment types: P&I vs Interest-Only
Owner-occupiers usually pay Principal & Interest (P&I). Investors sometimes choose Interest-Only (IO) for cash-flow and tax reasons.
- P&I: you pay down the loan balance over time.
- Interest-Only: lower repayments for a set period, but the balance doesn't reduce.
Tax and structuring
Investment loan interest may be tax-deductible, and how you structure the loan can matter. This is general information — always confirm with your accountant.
lightbulbKey Takeaways
- check_circleInvestment rates are usually a little higher than owner-occupier rates.
- check_circleChoose P&I or Interest-Only based on your strategy and cash flow.
- check_circleGet tax advice before deciding how to structure an investment loan.
This article is general information only and does not take into account your personal circumstances. Speak with a qualified mortgage broker for advice specific to you.
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