Top Strategies to Refinance Your Investment Property

Investment property loans don't work like your home loan. Lenders price them differently, they come with stricter serviceability rules, and plenty of landscapers sit on rates that made sense three years ago but don't make sense now.

Refinancing an investment property means moving your existing loan to a different lender or restructuring your current loan to access better terms, lower your interest costs, or pull equity out for your next purchase. The process looks similar to when you first borrowed, but lenders reassess your income, expenses, and the property's current value before approving the switch.

Why Refinance an Investment Loan

You refinance to reduce what you're paying in interest, access features your current loan doesn't have, or release equity tied up in the property. If you took out a loan when your business was smaller or your income was harder to document, you might now qualify for products that weren't available to you then. If your fixed rate period is ending and you're about to roll onto a higher variable rate, refinancing can lock in something more workable.

Consider a landscaper who bought an investment property during the busy season but couldn't prove consistent income at the time. They ended up with a rate that reflected the higher risk the lender saw. Two years later, their books are cleaner, their ABN income is steady, and they can show regular contracts. That same borrower could now refinance to a loan with a lower rate and better terms, potentially saving thousands each year in interest.

Lenders also offer offset accounts, redraw facilities, and the ability to split between fixed and variable rates. If your current loan doesn't include these, refinancing can give you more control over repayments and how you manage cash flow between jobs.

When the Numbers Actually Stack Up

Refinancing costs money upfront. Expect discharge fees from your current lender, application fees with the new one, and valuation costs if the lender wants a fresh appraisal. If you're still within a fixed rate period, break costs can run into the thousands depending on how much time is left and how far rates have moved since you locked in.

The decision comes down to whether the ongoing savings outweigh what you'll pay to make the switch. A drop of 0.5% on a loan amount of $500,000 saves roughly $2,500 a year in interest. If your exit and entry costs total $1,500, you're ahead within eight months. If break costs push that figure to $6,000, it takes more than two years to recover.

Run the numbers before you commit. If your fixed rate is expiring soon, wait until it rolls off naturally rather than paying to break early. If you're already on a variable rate and another lender is offering something meaningfully lower, the case for switching becomes clearer.

Accessing Equity Without Selling

One of the most practical reasons to refinance an investment property is to access the equity you've built up without selling the asset. If the property has increased in value or you've paid down the loan, you can borrow against that equity to fund your next deposit, buy equipment, or expand your landscaping business.

Lenders typically let you borrow up to 80% of the property's value without paying lenders mortgage insurance. If your property is now worth more than when you bought it, that 80% threshold gives you access to more funds. Releasing equity means increasing your loan amount, so your repayments go up, but the funds you pull out can be put to work elsewhere.

As an example, a landscaper bought an investment property for $450,000 with a 20% deposit and borrowed $360,000. The property is now valued at $520,000. At 80% of the current value, they could borrow up to $416,000. After paying down the loan to $340,000, they have access to roughly $76,000 in usable equity. That amount could cover a deposit on another investment property or fund a new truck and equipment without dipping into business savings. For more on using property to grow your portfolio, see expanding your property portfolio.

How Lenders Assess Investment Loan Refinance Applications

Serviceability is the main hurdle. Lenders assess whether you can afford the repayments based on your current income, living expenses, and any other debts you're carrying. For investment properties, they don't take the full rental income into account. Most lenders only use 80% of the rent to allow for vacancy periods and maintenance costs.

If you're self-employed as a landscaper, lenders want to see tax returns, business activity statements, and sometimes a letter from your accountant. If your income fluctuates seasonally, they'll average it over two years. If you've recently had a strong year but the year before was lean, that average might not reflect where your business is now.

Some lenders also apply a buffer to interest rates when calculating serviceability, adding 2% to 3% to the actual rate to make sure you can still afford repayments if rates rise. If you're carrying car loans, equipment finance, or personal debts, those repayments reduce what you can borrow. Refinancing with debt consolidation in mind can sometimes improve your serviceability by rolling higher-interest debts into the mortgage at a lower rate. More on that approach at debt consolidation loans for tradies.

Switching Between Fixed and Variable Rates

Investment loans can be structured as variable, fixed, or split between the two. Variable rates move with the market, which means your repayments can go up or down. Fixed rates lock in a set rate for a period, usually between one and five years, giving you certainty but less flexibility.

If you're currently on a variable rate and want to lock in some stability, refinancing lets you fix part or all of the loan. If you're coming off a fixed period and the variable rate your lender is offering doesn't suit, you can switch lenders and choose a new structure that does.

Split loans give you a middle ground. You might fix half the loan to protect against rate rises and leave the other half variable so you can make extra repayments without penalty. This approach works well for landscapers who have irregular income and want the option to pay down the loan faster during peak season while still having some protection if rates climb.

The Refinance Application Process for Investment Properties

The application follows a similar path to your original loan. You'll need to provide identification, proof of income, details of your current loan, and information about the investment property. The new lender will order a valuation to confirm what the property is worth now, and that valuation determines how much you can borrow.

If the valuation comes in lower than expected, it can limit your borrowing capacity or mean you can't access as much equity as you planned. If you've done work on the property or the area has seen strong price growth, the valuation might come in higher, giving you more options.

Once the application is approved, the new lender handles the discharge of your old loan and the settlement of the new one. The process usually takes three to six weeks depending on how quickly you can provide documents and how long the valuation takes. If you're refinancing to access equity for another purchase, timing matters. You'll need the refinance settled before you can use those funds for a deposit.

For landscapers juggling jobs and paperwork, working with a broker who understands self-employed income makes the process move faster. We pull together what lenders need to see and present it in a way that makes sense to them. You can read more about how that works at home loans for landscapers.

What to Watch Out for When Refinancing Investment Loans

Some lenders advertise low headline rates but load the loan with conditions that don't suit investment properties. You might see a rate that only applies if you're an owner-occupier, or a product that doesn't allow offset accounts or additional repayments. Read the comparison rate, not just the advertised rate, and check what features come with the loan.

If you're planning to buy another investment property in the next year or two, don't max out your borrowing capacity with this refinance. Lenders assess your total debt position when you apply for a new loan, and if you've already borrowed up to 80% across multiple properties, your serviceability for the next purchase gets tighter.

Also, don't assume your current lender won't negotiate. Before you go through a full refinance, call them and ask what rate they can offer if you're considering leaving. Some lenders will drop your rate to keep you, especially if you've been paying on time and your loan amount is solid. If they won't move, then you know refinancing is the right call.

Call one of our team or book an appointment at a time that works for you. We'll run through your current loan, show you what's available, and work out whether refinancing makes sense for where your business and property plans are heading.

Frequently Asked Questions