How to Use Investment Loans in Redbank Plains

An investment loan is a mortgage used to purchase property you intend to rent out rather than live in.

Lenders treat investment loans differently to owner-occupied home loans because they carry different risks. Rental income can offset some of your repayment costs, but lenders also know that investment properties can sit vacant between tenants and that landlords sometimes prioritise their own home loan over an investment property if finances get tight. Because of this, most lenders charge slightly higher interest rates on investment loans and expect you to have a larger deposit saved.

What deposit do you need for an investment property in Redbank Plains

Most lenders require a 20 per cent deposit for an investment property to avoid paying Lenders Mortgage Insurance.

If you're looking at properties around Redbank Plains, you'll need enough saved to cover that deposit plus settlement costs such as stamp duty, legal fees, and building and pest inspections. Stamp duty in Queensland is calculated on the purchase price, and unlike owner-occupiers, first-time investors do not qualify for concessions or exemptions.

Some lenders will accept a 10 per cent deposit, but you'll pay LMI and possibly a higher interest rate. A smaller handful of lenders offer investor loans with as little as 5 per cent down, though these products come with strict serviceability tests and limited availability. If you already own a home with equity, you may be able to use that equity as part or all of your deposit rather than needing cash savings. A broker can show you how much equity you can access and what your new repayments would look like across both loans.

Interest only or principal and interest repayments

You can structure an investment loan with either interest only repayments or principal and interest repayments.

With interest only, you pay just the interest charged each month and the loan balance stays the same. This keeps your repayments lower during the interest only period, which usually lasts between one and five years. After that period ends, the loan reverts to principal and interest and your repayments increase. Some investors choose interest only to improve cash flow in the early years, especially if the property is negatively geared. Others prefer to pay down the loan balance from the start.

Principal and interest repayments are higher each month, but you reduce the amount you owe over time and build equity in the property. This approach works well if you want to pay the loan off faster or if you're planning to use the equity for further property purchases down the track. Most lenders offer both structures, and you can often switch between them once during the loan term if your circumstances change.

Variable or fixed interest rates for investment loans

Variable rates move up and down with the market, so your repayments can change.

Fixed rates lock in your interest rate for a set period, usually between one and five years. During that time, your repayments stay the same regardless of what happens to rates in the broader market. Once the fixed term ends, the loan reverts to a variable rate unless you negotiate a new fixed term.

Some investors split their loan, fixing part and leaving part variable. This gives you some repayment certainty while keeping the flexibility to make extra repayments on the variable portion without penalty. If you fix the entire loan and rates drop, you're still locked into the higher rate. If you stay variable and rates rise, your repayments go up. Neither option is universally better, it depends on your risk tolerance and how long you plan to hold the property.

How rental income affects your borrowing capacity

Lenders will include rental income when calculating how much you can borrow, but they don't count all of it.

Most lenders take 80 per cent of the expected rent to account for vacancy periods, maintenance costs, and the possibility that the property might sit empty between tenants. If you're buying in Redbank Plains, where rental demand is driven by affordability and proximity to Ipswich and the Centenary Highway, you'll want to provide evidence of realistic rent estimates. A rental appraisal from a local property manager is usually enough.

The lender will also assess your existing income, other debts, living expenses, and financial commitments before approving the loan. If the property is negatively geared and you're relying on your salary to cover the shortfall each month, you need to show you can afford both the investment property repayments and your own living costs. For buyers purchasing their first investment property while still renting, this serviceability test can be tight. Reducing credit card limits or paying off smaller debts before applying can help.

Tax treatment and negative gearing from 1 July 2027

From 1 July 2027, negative gearing rules will change for residential properties purchased after 7:30pm AEST on 12 May 2026.

Under the new rules, rental losses from affected properties can only be offset against other rental income or carried forward to offset future rental income or capital gains from residential property. You won't be able to offset those losses against your salary or other non-property income. Properties purchased before that date and time, including those under contract awaiting settlement, will continue under the old rules and can still be negatively geared against wage income.

Eligible new builds are exempt from the quarantining rule. If you buy a newly constructed dwelling on previously vacant land, or a property where the total number of dwellings has increased, you can still negatively gear that property under the existing rules even if you purchase after the cut-off date. A knock-down rebuild that replaces one dwelling with one dwelling does not qualify. If a new build is lived in for more than 12 months before being sold, the next buyer loses access to negative gearing. These changes do not affect your ability to claim deductions for loan interest, property management fees, repairs, or other rental expenses. They only affect where you can offset a net rental loss.

Loan features that suit property investors

Most investment loans come with an offset account or redraw facility, though not all investment loan products include both.

An offset account is a transaction account linked to your loan. The balance in the offset reduces the amount of interest you're charged without actually paying down the loan principal. If you have $20,000 in your offset and a $400,000 loan, you're only charged interest on $380,000. This is useful for investors who want to reduce interest costs while keeping cash accessible for repairs, rates, or future property purchases.

A redraw facility lets you make extra repayments on your loan and withdraw them later if needed. Redraw isn't available on interest only loans because you're not paying down the principal, so there's nothing extra to withdraw. Some lenders charge a fee each time you redraw, and others limit how much or how often you can access those funds. If you plan to use equity from your investment property to buy another property later, an offset account gives you more control.

Some lenders also offer rate discounts if you have multiple loans with them or if you're borrowing a larger amount. It's worth comparing loan features alongside interest rates rather than choosing based on the rate alone.

Refinancing an investment loan

You can refinance an investment loan to get a lower rate, access equity, or switch lenders.

If you've held the property for a few years and paid down the loan or if the property has increased in value, you may have equity you can use as a deposit on a second investment property. Refinancing lets you pull that equity out without selling. The new lender will revalue the property and calculate how much you can borrow based on the updated value and your current financial position.

Refinancing also makes sense if your current rate is no longer competitive or if your lender won't offer you the loan features you need. Some lenders are more flexible with interest only periods or offset accounts, and switching can save you thousands over the life of the loan. Keep in mind that refinancing involves application fees, valuation costs, and sometimes discharge fees from your old lender. A broker can calculate whether the potential saving outweighs the upfront cost.

Call one of our team or book an appointment at a time that works for you. We'll walk through your current financial position, show you what deposit you'll need, and help you compare loan options that suit the type of property you're looking at in Redbank Plains.

Frequently Asked Questions