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Strategies for property investors

We can help you free up funds from your investment property with our interest only loans. We also explain negative gearing which has the potential to optimise the tax benefits available from your investment property.

How interest only mortgages can benefit you

Interest only home loans reduce your repayments because they cover the interest portion of the loan only. They do not reduce the principal amount of the loan.

An interest only home loan may suit you if you want to:

  • Manage repayments – paying interest only off your home loan frees up the funds you would have used to pay the principal for other investments
  • Gain a tax benefit – you may be able to claim the interest portion of the repayment as a tax deduction if the property is an investment and you are negatively gearing
  • Purchase an investment property while minimising your home loan repayments.

Interest only home and investment loans

Westpac lets you choose an interest only period of up to 10 years and this is available on these loans:

You can also choose to pay interest only in advance

The interest only in advance option is available on the Fixed Option Investment Loan for a fixed interest term of up to 5 years. It allows you to pay interest 12 months in advance and receive a discount off the standard fixed interest rate. You may also be able to take advantage of tax benefits by claiming the interest as a tax deduction.

Negative gearing property for investment

Understanding gearing and taxation will help you optimise the tax benefits available from your investment property. Gearing is the term used to describe borrowing for investment purposes.

  • Positive gearing means the rental income from your property exceeds the costs of owning it, i.e. bank interest and fees, property and maintenance costs
  • Negative gearing means the costs of owning your property exceed the income it generates.

The benefits of negative gearing property

Negative gearing an investment property may be beneficial as an investor. The $700 monthly shortfall shown below could be used as a tax deduction against other income from salary or wages.

Negative gearing

  Rental income on investment property

  $1,500 per month



  Loan interest

  ($2,000) per month

  Council rates

  ($200) per month


  $700 per month


Contact us

Talk to a Westpac home loan expert on 131 900 for more details.

Things you should know
  • The taxation position described is a general statement and should only be used as a guide. It does not constitute tax advice and it is based on current tax laws and their interpretation. Westpac Financial Planners are not qualified to give tax advice. Your individual situation may differ and you should seek independent professional tax advice on any taxation matters.
  • The information contained within this page is general in nature. It serves as a guide only and does not take into account of your personal financial needs. Before you act on this information you should seek independent legal and financial advice.

Did you know?

You can take a first hand look at how Australia’s residential property market is performing. Get your free Westpac/Herron Todd White Property Report.