12th May 2026
Educational

Is Your Investment Property Loan Structured Right Before EOFY?

The end of the financial year has a way of focusing the mind. You book time with your accountant, you dig out your receipts, and suddenly you’re looking at your investment property properly for the first time since settlement. But there’s a piece of this annual review that often gets skipped: your loan structure.

Whether your loan is set up correctly matters year-round, but the period before 30 June is when investors tend to sit down with their accountant and work through the numbers. That conversation goes better when your loan is doing what it should be doing.

This article covers the loan-side of that review. Your accountant advises on your tax position. We look at whether your loan structure is actually set up to support your investment goals.

Important disclaimer: This article is about loan structure only. It does not constitute tax or financial advice. All questions about tax deductibility, negative gearing, and capital gains should be directed to your registered accountant or tax agent.

What Does “Loan Structure” Actually Mean for an Investment Property?

Your loan structure is the combination of decisions that shape how your debt is held and repaid. For investment properties, those decisions are: whether your loan is interest-only or principal and interest, whether you have an offset account attached, how your investment debt sits relative to your owner-occupier debt, and which lender is holding each loan.

None of these are set-and-forget decisions. They can and should be reviewed regularly, and the lead-up to EOFY is a natural moment to do it – especially if your loan was set up during 2021 or 2022, when borrowing conditions looked very different from today’s environment.

Interest-Only vs Principal and Interest: How They Work Differently for Investors

An interest-only (IO) loan means your repayments cover the interest charged each period, but you are not paying down the principal – the amount you originally borrowed. A principal and interest (P&I) loan means your repayments cover both interest and a portion of the loan balance, which reduces your debt over time.

For investors, the choice between these two structures affects your cash flow, your equity position, and what your accountant is working with at tax time. Which structure is right for your situation depends on your goals, your cash flow, and the lender’s current assessment of your position.

What is worth knowing:

IO periods are typically available for 1 to 5 years at a time. After that, the loan reverts to P&I unless you refinance or renegotiate.
When an IO period expires, repayments increase, sometimes significantly, because you are now paying down the same principal over a shorter remaining term.
Lenders assess IO applications more carefully than they did in 2019-2022. Depending on your LVR (Loan-to-Value Ratio – the percentage of the property’s value you are borrowing) and serviceability, your options may have changed since you last reviewed.
Not all lenders offer the same IO terms on investment loans. Comparing across 30+ lenders is more useful than assuming your current lender has the best available terms.

If your IO period is expiring in the next 12 months, that is worth flagging with your broker before it happens – not after.

Why Loan Separation Matters (and Why Mixed Debt Can Cause Problems)

Loan contamination is the informal term for what happens when your owner-occupier debt and your investment debt get mixed together in a way that makes them difficult to separate cleanly. This typically happens when an investor refinances both loans together, uses a redraw on their owner-occupier loan to fund an investment purchase, or uses a line of credit that blends personal and investment purposes.

When that happens, your accountant faces a more complex job at tax time – because separating the investment-related portions from the personal portions requires detailed records and, in some cases, becomes legally and administratively messy.

From a loan structure perspective, the cleaner approach is to keep investment debt and owner-occupier debt as separate loan facilities with separate accounts. How that affects your tax position is a question for your accountant. What we can say is that the practical outcome of clean separation is less complexity at every review.

If your current loans are structured in a way that blends purposes, a loan restructure is worth discussing with your broker well before 30 June – not at 5pm on the 28th.

Do Offset Accounts Work Differently on Investment Loans?

Yes. The way offset accounts work on investment loans is not the same as on owner-occupier loans – and this is one of the more commonly misunderstood areas of investment loan structure.

An offset account is a savings account linked to your loan. The balance in the offset account is deducted from your loan balance before interest is calculated. If you owe $400,000 on your loan and have $50,000 sitting in your offset, you are only charged interest on $350,000.

For owner-occupier loans, this is a straightforward benefit. For investment loans, the situation is more nuanced. Whether and how an offset account should be used on an investment loan, and what the tax implications of drawing down that offset balance are, is a question for your accountant.

What your broker can tell you: not all lenders offer offset accounts on investment loans. Some only offer redraw facilities (which work differently). If having an offset account on your investment loan is important to your strategy, it is worth confirming that your current loan actually has one – and that it is working the way you expect it to.

Has Your Investment Loan Rate Kept Up With the Market?

The RBA has raised the cash rate three times in 2026, bringing it to 4.35% as of May 2026 (Reserve Bank of Australia, May 2026). The rate cycle has moved significantly since the lows of 2020-2022, when many investors locked in historically competitive rates.

If you purchased or last refinanced your investment property between 2020 and 2022 and have not reviewed your loan since, there is a reasonable chance that the rate environment has shifted in ways that make a comparison worthwhile. A variable rate that was competitive in 2022 may look quite different when compared against today’s market.

According to the Mortgage & Finance Association of Australia (MFAA), mortgage brokers now write 74.1% of all new residential home loans in Australia – in large part because comparing options across multiple lenders consistently produces better outcomes than staying with a single institution. That comparison work applies just as much to investment loans as to owner-occupier loans.

You can use our refinancing calculator to get a starting-point estimate of potential savings if your rate has drifted from the market.

What to Bring to Your Broker Before EOFY

A useful pre-EOFY loan review covers four questions:

Is my IO period expiring soon? If yes, when does it expire and what are your options for extending, switching to P&I, or refinancing to a new lender.
Is my investment debt clearly separated from my owner-occupier debt? If your loans are blended or mixed, your broker can outline the structural options. Your accountant should be part of this conversation.
Does my investment loan have the features I need? Offset account, redraw facility, additional repayment flexibility – check that what you think you have is what you actually have.
Is my rate still competitive? With the cash rate at 4.35% and lenders applying their own margins on top, a review across 30+ lenders may reveal options worth considering.

If you are also expecting the Federal Budget on 12 May 2026 to include changes to negative gearing or capital gains tax rules – as has been widely flagged but not yet confirmed – that is a conversation to have with your accountant. How any announced changes interact with your loan structure is a tax question, not a lending question. But having your loan in good order before any changes take effect means you are starting from a position of clarity.

For more on the mechanics of refinancing an investment property, read our article on refinancing your investment property in Northern NSW – many of the structural principles covered there apply nationally.

Is It Too Late to Review Before 30 June?

It is not too late, but earlier is better. A loan restructure or refinance takes time – typically 3 to 6 weeks from application to settlement, depending on the lender and complexity. If you want changes in place before 30 June, starting in May gives you a workable window. Starting in late June does not.

A broker conversation costs nothing and takes 20 to 30 minutes. It will tell you whether there is something worth acting on, or confirm that your loan is already working well. Either outcome is useful before you sit down with your accountant.

Book a free phone appointment with the Borro team to review your investment loan structure before EOFY.

This article is general information only and does not constitute financial or tax advice. Your personal circumstances may differ. Talk to your broker about your loan structure and your registered accountant or tax agent about the tax implications of any changes.

What is the difference between interest-only and principal and interest for an investment loan?

An interest-only loan means your repayments cover only the interest charged each period – you are not paying down the amount you borrowed. A principal and interest loan means your repayments cover both the interest and a portion of the loan balance. For investment properties, the choice affects your cash flow and equity position. The tax implications of each structure should be discussed with your accountant.

Can I have an offset account on my investment loan?

Some lenders offer offset accounts on investment loans, but not all. Some lenders offer redraw facilities instead. If having an offset account on your investment property loan is part of your strategy, it is worth confirming with your broker that your current loan includes one – and understanding how it works compared to an owner-occupier offset account.

What is loan contamination and why does it matter?

Loan contamination refers to investment and personal debt becoming mixed together in a way that is difficult to separate cleanly. This can happen if you use a redraw on your owner-occupier loan to fund an investment purchase, or use a single line of credit for both purposes. The practical consequence is that separating the investment portions at tax time becomes more complex. Your broker can outline structural options; your accountant advises on the tax implications.

Is it worth refinancing an investment loan before EOFY?

It depends on your current rate, your loan structure, and whether your loan features still match your strategy. Given the RBA has raised the cash rate to 4.35% across three hikes in 2026, investors who have not reviewed their loan since 2022 may find the market has moved materially. A broker comparison across 30+ lenders will tell you whether there is a genuine saving on offer.

Should I talk to my broker or my accountant first?

They serve different purposes. Your broker reviews your loan structure, rate, and features – the mechanics of how your debt is held. Your accountant advises on the tax implications of your investment. The most useful EOFY review involves both conversations. If you are unsure where to start, your broker can outline the loan-side picture first so you can go to your accountant with clear information about your current structure.