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Refinancing Investment Loans

When does it make sense to refinance an investment loan, and what should I watch out for?

By Andrew, franklenn FINANCE 6 min readUpdated 3 November 2026

The short answer

Refinancing an investment loan can make sense if you can get a lower rate, a better structure, access to equity for your next purchase or to untangle loans that tie properties together. Compare the savings with the costs of switching, such as discharge fees and any fixed-rate break costs. Lenders will reassess your serviceability, so check your position before applying and keep the purpose of each loan split clear for tax.

Detailed explanation

Common reasons investors refinance

Investment loan rates are often higher than owner-occupier rates, and loyal customers do not always get the best deal. Refinancing can reduce your rate, but investors usually refinance for structural reasons too.

Over time, a portfolio built loan by loan can become messy. Refinancing is a chance to tidy it up.

  • A lower interest rate or fees
  • Releasing equity for the next purchase
  • Separating cross-collateralised loans
  • Switching between interest-only and principal and interest
  • Adding offset accounts or clearer loan splits

Costs and catches

Switching usually involves a discharge fee from your current lender, government registration fees and possibly application or valuation fees from the new lender. If you are on a fixed rate, break costs can be significant, so get a quote first.

If your loan-to-value ratio is above 80%, you may need to pay LMI again with the new lender. And because the new lender reassesses your serviceability with today's rules, an investor with several loans may find it harder than expected.

Keep tax in mind

Generally, interest deductibility depends on what the money was used for. If you refinance an investment loan, keep the new loan for the same purpose and amount so the records stay clean. Mixing in personal spending or increasing the loan for non-investment reasons can complicate things.

We are not tax advisers, so speak to your accountant before restructuring.

Ask your current lender first, but compare

Sometimes your current lender will drop your rate if you ask, especially if you have an offer elsewhere. That saves the cost and effort of switching. But a rate cut alone will not fix a poor structure, so look at the bigger picture.

We compare options across our lender panel and set out the real cost and benefit, including fees, so you can make an informed decision.

Untangling cross-collateralised loans

Many investors start with one lender and end up with properties tied together, where one loan is secured by more than one property. This can make it harder to sell one property, release equity or move to another lender, because the lender looks at the whole bundle.

Refinancing is often the best time to separate these loans, so each property has its own loan and security. It can involve valuations on several properties and a careful look at loan-to-value ratios, and sometimes it makes sense to move only part of a portfolio. We can map out your current structure and show what a cleaner setup might look like, along with the costs involved.

Even if you are happy with your current lender, simply knowing how your loans are secured is valuable. It tells you what you could do quickly if an opportunity or a problem came up, and what would need to happen first.

  • List every loan and which properties secure it
  • Check current valuations and LVRs
  • Plan a structure with standalone security for each property
  • Compare the cost of restructuring with the long-term flexibility

Worked example

Savings from refinancing an interest-only investment loan

Illustrative example only. An investor has a $587,400 interest-only loan at 6.54% p.a. and refinances to 5.99% p.a. Switching costs (discharge and registration fees) total $612.

Loan balance$587,400
Annual interest at 6.54%$38,415.96
Annual interest at 5.99%$35,185.26
Annual interest saving$3,230.70
Less switching costs$612.00
Net saving in the first year$2,618.70

The investor saves about $2,618.70 in the first year and around $3,230.70 a year after that, assuming rates stay the same. Because investment interest is usually tax deductible, the after-tax saving may be smaller, so check with your accountant.

Illustrative only. Figures are examples, not a quote or a recommendation.

Common mistakes

  • Refinancing for a small rate cut without counting fees and break costs
  • Increasing an investment loan for personal spending
  • Assuming you will pass serviceability with a new lender
  • Carrying cross-collateralised loans across to the new lender
  • Forgetting to ask your current lender for a better rate first

Frequently asked questions

Next steps

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This guide is general information only and does not consider your objectives, financial situation or needs. It is not financial, tax or legal advice. Lender policies, rates and government schemes change. Please speak with us, and with your accountant or solicitor where relevant, before acting.

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