14 May 2025 2025 Complete Guide to Investment Property Loans in Melbourne for First-Time Investors
Investment property loans are a key tool for first-time investors entering Melbourne’s booming real estate market. With strong rental demand, expanding infrastructure, and high-growth suburbs, the city remains a top pick for local and interstate buyers in 2025. Understanding how these loans work is essential for making smart financial decisions and building a sustainable portfolio.
That’s where the Melbourne mortgage brokers at EverLend come in. We offer tailored advice, compare lenders, and structure loans for tax efficiency and long-term growth, helping first-time investors boost loan approval odds and make confident decisions.
This guide will walk you through how investment property loans work, the different types available, and how to apply successfully as a first-time investor in Melbourne.
What are Investment Property Loans?
Investment property loans are designed for individuals looking to buy real estate to generate rental income or capital growth. In Melbourne, where property prices can vary widely across suburbs, these loans help investors tap into the city’s high-growth areas and long-term property returns.
Unlike a standard home loan for a personal residence, these loans are tailored specifically for rental property purchases. They’re often used by Melbourne property investors to expand their portfolios, access tax benefits, and take advantage of market trends in the eastern and western suburbs.
Difference Between Investment and Owner-Occupier Loans
Investment loans typically come with higher interest rates than owner-occupier loans. This is because lenders view them as higher risk due to fluctuations in rental income, vacancies, and maintenance costs.
Another key difference is the structure of repayments and eligibility. Investment loans in Melbourne often allow for interest-only payment periods to support positive cash flow, while owner-occupier loans focus more on reducing the loan balance over time.
Eligibility for investment loans is also more stringent, with stricter criteria on income, deposit size, and borrowing power.
Gold Coast Property Market in 2025: Insight Into First-Time Property Investors
In 2025, the Gold Coast continues to be a hotspot for first-time investors seeking rental yield and long-term capital growth. The median house price is $987,000, while units average $656,000, making them more accessible for new buyers (CoreLogic).
Rental vacancy rates remain low at 1.1%, and average gross rental yields for units are around 4.5%, appealing to investors prioritising positive cash flow (SQM Research).
High internal migration, infrastructure upgrades like the Light Rail Stage 3, and continued population growth are driving housing demand. Suburbs such as Labrador, Southport, and Pimpama are seeing strong rental interest and steady value increases.
Why Melbourne is Ideal for First-Time Investors
Melbourne presents better value entry points than Sydney, with strong rental demand, government-backed infrastructure, and high-growth potential in fringe areas. Outer suburbs offer lower purchase prices and better yields, ideal for building equity early.
Key Suburbs for Investment in 2025
- Werribee – Median ~$630K, solid growth and family appeal
- Sunshine – Rapid gentrification, proximity to CBD
- Craigieburn – Affordable new developments
- Tarneit – High rental demand and planned rail upgrades
- Pakenham – Urban expansion and strong yields
Loan Options for Investment Properties in Melbourne
Melbourne property investors in 2025 have a wide range of tailored loan options. Choosing the right type depends on your investment goals, budget, and risk appetite.
Interest-Only Loans
Ideal for investors focused on rental income and short-term cash flow. Monthly repayments cover only the interest, which maximises negative gearing benefits early on.
Principal and Interest Loans
These loans repay both the interest and loan balance from day one. Better suited for long-term investors aiming to build equity steadily.
Fixed Rate Loans
Your interest rate stays locked in, usually for 1–5 years. Great for first-time investors wanting stable monthly payments and easier budgeting.
Variable Rate Loans
Rates move with the market, offering flexibility and extra repayment options. Investors can benefit when Australian interest rates fall, but risk higher costs if they rise.
Split Loans
Combines fixed and variable portions in one loan. This offers the security of fixed repayments with the flexibility of variable rates.
Construction Loans
Used to fund new builds or major renovations on investment properties. You draw down funds in stages, paying interest only on the amount used.
Find the Right Investment Loan with EverLend
Not sure which loan suits your first property investment? EverLend’s Melbourne-based brokers help you compare options and find a loan that matches your goals, risk level, and budget.
Book your free consultation today by calling 03 7036 3356 or visiting our website at www.everlend.com.au. We’ll help you get it right from the start.
How to Qualify for an Investment Property Loan in Melbourne
Getting approved for your first investment loan in Melbourne means understanding what lenders want. Here’s a clear breakdown of the eligibility criteria and what you’ll need to prepare.
- Minimum Deposit Requirements: Most lenders require a 20% deposit of the property’s purchase price to avoid Lenders Mortgage Insurance (LMI). A smaller deposit may still be accepted but will cost more upfront.
- Proof of Income and Employment: Lenders will want your payslips, tax returns, bank statements, and any projected rental income. This helps confirm you can meet monthly mortgage repayments without strain.
- Credit Score and Debt Position: A credit score of 650+ is usually the benchmark for most Australian lenders. They’ll also assess your current debts, credit cards, and financial commitments to determine your Debt-to-Income (DTI) ratio.
- Loan Documentation: Prepare your ID, proof of income, bank and loan statements, and any existing lease agreements or rental projections. If you’ve already chosen a property, include the contract of sale.
- Upfront and Ongoing Loan Costs: Be ready for application fees, valuation fees, legal costs, and potential lender fees. Ongoing costs include loan service fees, interest, landlord insurance, property management fees, and maintenance costs.
- Stamp Duty and Government Charges (Victoria): In Victoria, expect to pay 5–6% of the property price in stamp duty, plus registration and transfer fees. Use the State Revenue Office VIC calculator to estimate your final charges.
- Type of Property You Choose: Lenders assess risk based on property type. Apartments under 50m², off-the-plan units, or properties in high-density or regional areas often face tighter lending rules or lower valuations.
Free-standing houses and well-located townhouses in growth suburbs are generally viewed more favourably. Choosing the right type of property investment increases your approval chances and supports stronger capital growth.
Want expert help to match the right property with the right loan? Speak to EverLend’s Melbourne brokers today and avoid costly missteps.
How to Apply for an Investment Property Loan in Melbourne
Applying for an investment home loan in Melbourne takes more than just filling out forms; it’s about aligning your finances, goals, and timing. With the right steps and professional advice, the process becomes smoother, faster, and more rewarding.
Step 1. Set Clear Financial Goals
Start by outlining your short- and long-term financial goals. This shapes your investment strategy and helps determine your ideal return on investment.
Step 2. Assess Your Borrowing Capacity
Use an experienced Melbourne mortgage broker, such as the team at EverLend, or an online tool to estimate your borrowing capacity based on income, debts, and taxable income. This will guide your budget and property search limits.
Step 3. Identify the Right Type of Loan
Choose a type of loan that matches your risk profile and goals. Options include a variable loan, fixed loan, or a split loan; each has pros and cons depending on rate movements.
Step 4. Understand Tax Implications
Check how tax implications like negative gearing or capital gains tax could affect your taxable income. Speaking to a financial advisor or accountant is strongly recommended.
Step 5. Work with a Mortgage Broker
A qualified Melbourne mortgage broker will help you compare competitive interest rates, navigate the current market, and match you with a lender that suits your profile. Brokers can also advise on usable equity if you already own a property.
Step 6. Calculate Upfront Costs
Estimate upfront costs like stamp duty, legal fees, lender fees, and inspections. These can add up to 5–7% of the property price, so it’s essential to include them in your budget.
Step 7. Get Pre-Approval
Lenders typically issue pre-approval within 5–10 business days once documents are submitted. This shows sellers and your real estate agent that you’re serious and financially ready.
Step 8. Begin Your Property Search
Use your pre-approval to focus your property search within your budget. Pay attention to property values, suburb growth potential, and projected rental yields.
Step 9. Engage Property Managers Early
If buying a rental, contact property managers to assess expected rent and tenant demand. This helps forecast your loan repayments and ongoing costs.
Step 10. Submit Your Loan Application
Once you’ve found a property, submit the full loan application. Include the contract of sale, updated financials, and any documents your lender requests.
Step 11. Loan Processing and Approval
Loan approval usually takes 7–14 business days after application, depending on lender response and valuation delays. Your broker will follow up to ensure things move quickly.
Step 12. Receive Unconditional Approval
When approved, you’ll receive an unconditional approval letter, confirming the bank’s full backing. Now you can proceed to finalise the property purchase.
Step 13. Settlement Process
The settlement period in Victoria usually ranges from 30 to 90 days. During this time, legal and financial checks are completed, and the loan funds are released to the seller.
Step 14. Review Loan Repayments and Strategy
Once your loan begins, review your loan repayments and monitor your investment strategy. Stay in touch with your property managers, review your property portfolio regularly, and seek ongoing professional advice to maximise performance.
Partner with EverLend for Smarter Investing
Ready to take the next step in your property journey? At EverLend, our Melbourne mortgage brokers specialise in helping first-time investors find the right loan fast.
Call us on (03) 7036 3356 or visit www.everlend.com.au to book your free consultation today. Let’s get your investment strategy on track.
Frequently Asked Questions (FAQs)
What type of investment property is best for beginners?
A well-located property with low maintenance and strong rental returns is ideal for beginners. Look for a tangible asset in areas with steady cash flow, reliable tenants, and strong capital growth potential.
How much deposit do I need for an investment property in Victoria?
Most lenders require a 5–10% deposit for a Victorian investment property, but a larger deposit reduces borrowing costs and avoids LMI. Don’t forget transaction costs like Council rates, land tax, and building insurance.
How to buy your first investment property in Australia?
Start with a clear property investment strategy and assess your risk tolerance, financial circumstances, and borrowing capacity. Use expert advice to find suitable properties, understand loan types, and prepare for loan settlement.
What type of property is best for first investment?
A physical asset like a small house or townhouse in a growth suburb offers a strong start. Focus on property condition, access to amenities, and standards for property that attract good tenants and avoid unexpected costs.
Is it worth buying an investment property in Melbourne?
Yes, Melbourne remains an attractive option due to strong capital growth strategy prospects, rising rental price, and growing population demand. With the right investment property financing, it supports long-term passive income and future investments.
What are the loan options for investment property buyers?
You can choose from rate home loans, variable interest rates, or fixed loans based on your rate period and rate term. Always check the comparison rate, loan interest rate, and repayment terms before committing.
What extra costs should I prepare for as an investor?
Aside from the deposit, factor in property taxes, property maintenance, income for property management, and exit strategy planning. A professional property inspector helps avoid low-quality properties and hidden repairs that add to your extra cost.
Final Thoughts
If you’re planning to take your first step into investment property loans in 2025, you’re not alone, and you don’t have to figure it all out by yourself. At EverLend, we’re real people based in St Kilda, working with first-time investors right across Melbourne to make smart, confident moves.
Our local mortgage brokers will guide you through the process, help you compare your options, and tailor everything to suit your financial goals. Call us on (03) 7036 3356 or visit www.everlend.com.au to book your free consultation.
Let’s make your investment journey a smooth one and get you closer to the lifestyle and passive income you’ve been working towards.