Refinancing investment property means replacing your existing investment loan with a new one—usually to take advantage of lower interest rates, better loan features, or to access the equity you’ve built up in the property.
Many Australian property investors are exploring refinancing as a way to boost their cash flow, grow their portfolio, or adjust their loan structure to suit changing financial goals.
Whether you’re looking to reduce repayments, switch from interest-only to principal-and-interest, or use your property’s equity for a new purchase, refinancing can be a powerful tool. However, it involves careful planning, legal steps, and a clear understanding of the financial and tax implications.
In this guide, we’ll walk through everything you need to know about refinancing an investment property—from key considerations and tax effects to using equity and the legal conveyancing process.
What Should You Consider Before Refinancing My Investment Property in Australia?
Before you refinance your investment property, there are a few key things to think about. Refinancing means you are replacing your current loan with a new one—usually to get better terms, lower interest rates, or extra cash.
Here are the main points to consider:
1. Your Current Loan Terms: Look at your current interest rate, loan type (fixed or variable), and how long you’ve been paying the loan. Are you happy with the repayments? If not, refinancing might help.
2. Costs of Refinancing: Refinancing isn’t free. You might need to pay exit fees, loan application fees, property valuation fees, and legal costs. These costs should be compared to the long-term savings of the new loan.
3. Your Financial Position: Lenders will look at your credit score, income, existing debts, and how much rent your investment property earns. The better your financial profile, the more likely you are to get a better deal.
4. Loan Features: Do you want an offset account, redraw facility, or interest-only repayments? Make sure the new loan suits your goals and lifestyle.
5. Market Conditions: Interest rates go up and down depending on the Reserve Bank of Australia and the overall economy. If rates are low, it might be a good time to refinance.
Always do your research—or better yet, work with a trusted conveyancer and mortgage broker to help you find the best loan for your situation.
How Does Refinancing Affect Your Investment Property Loan Structure and Tax Position?
Refinancing can change how your loan works and how your investment property is taxed. It’s important to understand these effects before making a move.
1. Loan Structure
You might move from a fixed rate to a variable rate, or from a principal-and-interest loan to an interest-only loan. Some investors prefer interest-only loans because they keep repayments lower, helping with cash flow. But over time, you’ll pay more interest.
You can also refinance to combine several loans into one—called debt consolidation—or to extend the loan term, which can reduce repayments but increase interest paid over time.
2. Tax Deductions
Investment loan interest is usually tax-deductible in Australia. But be careful—if you refinance and use part of the loan for personal expenses (like a holiday or new car), that part of the interest may not be deductible.
Also, if you switch from interest-only to principal-and-interest, the principal portion is not tax-deductible. Always speak to your accountant to understand how your refinancing choices affect your tax return.
Can You Refinance to Access Equity in Your Investment Property for Another Purchase?
Yes, you can refinance to unlock equity in your investment property. Equity is the difference between what your property is worth and how much you still owe on the loan.
Example: If your property is worth $800,000 and you owe $500,000, you have $300,000 in equity. Banks will usually let you borrow up to 80% of your property’s value—so in this case, you could potentially borrow an extra $140,000 (80% of $800,000 is $640,000; $640,000 – $500,000 = $140,000).
1. What Can You Use the Equity For?
Many investors use this released equity to:
- Buy another investment property
- Renovate an existing property
- Cover other investment-related expenses
Be sure the new loan is structured correctly so the interest remains tax-deductible if used for investment purposes.
2. Risks to Consider
When you refinance to release equity, your loan amount increases. That means higher repayments and more debt. It’s important to be realistic about what you can afford, especially if rental income changes or interest rates rise.
Also Read: Using Equity to Buy Property: A Guide for Homeowners
A Fresh Start With the Right Support
Refinancing investment property can be a smart financial move—but only when it’s done with the right advice and clear understanding. From lowering your repayments to unlocking equity for your next big step, the benefits can be significant.
But it’s not just about getting a better rate. It’s about knowing how refinancing fits your goals, affects your taxes, and changes your legal responsibilities.
At every stage, having a professional conveyancer by your side ensures that you’re not just guessing—you’re making informed, secure decisions that protect your assets and future investments.
Ready to Refinance Your Investment Property?
Looking for expert help with refinancing investment property? CJC Law is here to guide you through the entire process with clarity, care, and legal precision. Our experienced team of conveyancers will handle the paperwork, liaise with lenders, and ensure your refinance is completed smoothly.
Whether you’re chasing better rates, equity access, or loan structure changes; reach out to our team today to ensure the process is smooth and done correctly.
