Investment Property Refinance

A Strategic Guide to Portfolio Growth for Australian Brokers

The Market Opportunity

Lowest Rates

Since Early 2023

Led by non-bank and member-owned lenders, strong competition provides a key opening for savvy investors.

The Market Dynamic: Opportunity vs. Risk

This chart visualizes the current market tension. While investor rates are attractive, they remain higher than owner-occupier loans, reflecting the lender's perception of risk. The gap between non-bank and major bank pricing highlights the clear opportunity.

This bar chart compares average variable interest rates. It clearly shows the pricing advantage non-bank lenders are pushing in the investor space, creating a refinance opportunity, while also showing the "risk premium" all investor loans have over owner-occupier products.

The Broker's Strategic Playbook

Success in this market isn't about finding the lowest rate—it's about technical precision and portfolio strategy.

1. LVR Optimization: Escaping the LMI Cliff

The Loan-to-Value Ratio (LVR) is the single biggest factor in rate and LMI. A broker's key role is to model the "LMI Cliff" for clients, showing how a small capital injection can result in massive savings.

Client at 82% LVR

(2% over the LMI threshold)

↓

Path A: Refinance Now

COST: $10,000+ in LMI

(+ Higher Interest Rate)

Path B: Inject $X

BENEFIT: No LMI

(+ Access to Best Rates)

This diagram shows the two paths for a client just over the 80% LVR mark. Your guidance helps them see the clear financial win of Path B.

2. Policy Alignment: Avoiding the Mismatch

Lender policies for investors are notoriously different. A low rate is useless if the client's legal structure (like a Trust or Company) is excluded. Pre-vetting policy is a non-negotiable step.

Client Application

(Borrowing as a Family Trust)

↓

Lender A

(Policy: Personal Only)

RESULT: Decline

Lender B

(Policy: Trusts OK)

RESULT: Proceed

This flow clearly shows how the same client application leads to two different outcomes. Your job is to filter out Lender A before an application is ever lodged.

3. Value Proposition: Beyond the Headline Rate

Refinancing is about optimizing the portfolio, not just the rate. A slightly higher rate with an offset account can be far more valuable than a "basic" loan, especially for an investor with high cash flow.

Loan A: Basic

  • Rate: 6.10%
  • Offset Account: None
  • Monthly Repayment: $3,040

Loan B: Pro Pack

  • Rate: 6.35%
  • Offset Account: 100%
  • Monthly Repayment: $3,120

The Real Value

With $100k parked in the offset, "Loan B" has a lower effective repayment and provides massive portfolio flexibility, making it the clear strategic winner despite a higher headline rate.

This comparison table demonstrates that the "cheapest" loan isn't always the "best." Your value is in showing the client this full financial picture.