Last updated: July 2026 · Reviewed by John Pierre Saliba, Director and Mortgage Broker, MFAA Accredited
Refinancing an Investment Property in Sydney
Investment property refinancing is slightly more complex than owner-occupier refinancing, lenders apply different rates, IO policies, rental income shading and LVR caps for investment loans. Getting the right lender for your investment refinance can mean a materially better rate and better loan features for your investor strategy.
Investment property clients are often sitting on their bank's loyalty rate, 0.5–0.8% above what a new lender would offer. On a $700,000 investment loan, that's $3,500–$5,600/year in after-tax interest that they're overpaying. The tax deductibility of investment interest makes this feel smaller than it is, but 30% tax credit on $5,000 still leaves $3,500 of unnecessary cost. The refinance usually pays for itself in 3–4 months.
Why Investment Refinancing Is Different
- Rates: Investment loans are priced 0.1–0.5% higher than equivalent owner-occupier loans, but the spread between lenders is often larger
- IO availability: Not all lenders offer IO on investment refinances, we identify those who do if IO suits your strategy
- Rental income: Your rental income helps serviceability, but lenders shade it (70–80%) and some are more generous than others
- LVR cap: Most lenders cap investment LVR at 80–90%, above 80% means LMI applies
- Portfolio exposure: Some lenders cap total investment exposure, relevant if you're refinancing multiple properties
Worked Example: Investment Refinance in Sydney
- Investment loan balance: $680,000
- Property value: $1,050,000 (LVR 65%)
- Current rate (IO, existing lender): 7.34% p.a.
- Current IO repayment: $4,159/month
- New lender rate (IO): 6.59%
- New IO repayment: $3,734/month
- Monthly saving: $425 ($5,100/year)
- After-tax saving (37% bracket, interest deductible): ~$3,213/year net
- Break-even on refinancing costs (~$1,200): ~4.5 months
Accessing Equity When Refinancing
If your Sydney investment property has grown in value, refinancing creates an opportunity to access equity at the same time, potentially funding a deposit on another property. Most lenders will lend to 80% LVR without LMI. On a property worth $1,050,000, that's $840,000 at 80%, minus your current loan of $680,000 = $160,000 accessible equity.
Portfolio Restructuring Through Refinancing
Refinancing one investment property is also an opportunity to review your whole portfolio structure, separating loans that are cross-collateralised, moving investment and owner-occupier loans to different lenders, and ensuring each property has a clean equity position. We assess the full portfolio picture before recommending an approach.
Cashback Offers for Investment Refinancers
Several lenders offer cashback of $2,000–$4,000 for refinancing investment loans. These are legitimate but require careful assessment, a slightly higher rate over 3 years can cost more than the cashback saves. We model the cashback against the rate difference for every client before recommending.
