Investment vs Owner-Occupied Loans: What’s the Difference?
Christian Stevens, Mortgage Broker
Published November 26, 2025, 2:10 P.M ET
Investment vs Owner Loans When applying for a home loan, lenders will ask whether the property is for personal use or investment. While both loan types help you purchase real estate, the purpose of the property significantly affects the interest rate, loan features, and borrowing power.
Here’s what every borrower should know about the differences between owner-occupied and investment loans — and how to choose the right one.
🔑 Key Facts
- Owner-occupied loans are for properties you live in — often offering lower rates and stricter serviceability.
- Investment loans are for properties you rent out — usually with slightly higher rates but greater flexibility.
- Your loan type affects interest, tax treatment, and borrowing capacity.
- Flint helps match your loan structure to your property purpose — and future plans.
What Is an Owner-Occupied Loan?
An owner-occupied loan is used to purchase a property that you intend to live in as your primary residence.
These loans typically come with:
- Lower interest rates (as lenders see owner-occupier lending as lower risk)
- More flexible loan terms
- Access to features like offset, redraw, and variable/fixed splits
- Eligibility for grants and concessions if you're a first home buyer
The key benefit? You convert your home loan into tax-deductible investment debt over time, improving your cash flow and building wealth in parallel.
What Is an Investment Loan?
An investment loan is used to buy a property that will be rented out to generate income — whether it’s residential or commercial.
These loans often:
- Have slightly higher interest rates than owner-occupier loans
- May require larger deposits or tighter servicing assessments
- Offer interest-only repayment options (to reduce outgoings)
- Enable tax deductions for loan interest and property expenses
To keep deductibility clean, the investment portion should be set up as a separate loan split (not mixed with personal spending).
Key Differences Between Investment and Owner Loans
| Feature | Owner-Occupied | Investment |
|---|---|---|
| Purpose | You live in the property | You rent it out |
| Interest Rates | Lower | Slightly higher |
| Tax Deductions | No (unless WFH space) | Yes (interest, expenses) |
| Grants & Concessions | Often available | Usually ineligible |
| Loan Types | P&I encouraged | Interest-only often available |
How Lenders Assess the Two Loan Types?
- Serviceability: Investment loans may include rental income in assessment, but lenders apply buffers to account for vacancies.
- Equity and deposit: Lenders often prefer at least a 20% deposit for investment lending, though lower is possible with LMI.
- Loan purpose declaration: You’ll need to clearly identify the property use — declaring an investment as owner-occupied (or vice versa) can breach your loan terms.
Can You Change Loan Purpose Later?
Yes — many borrowers switch between owner-occupied and investment loan status:
- Moving out and turning your home into an investment
- Buying a new home while keeping your current as a rental
- Refinancing to access investor-friendly loan features
You’ll need to inform your lender and may need to refinance if the terms change significantly.
📞 Need Help Choosing or Switching the Right Loan Type?
At Flint, we help borrowers:
- Understand the real-world differences between investor and owner-occupied lending
- Access tailored rates and structures based on your goals
- Plan ahead for future property use changes
Talk to Flint today and make sure your loan matches your purpose — and your financial plan.
To keep deductibility clean, the investment portion should be set up as a separate loan split (not mixed with personal spending).
There are a few exceptions where cross-collateralisation might be considered, such as:
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