Westpac expands investor lending flexibility
Major Australian bank Westpac has announced significant updates to its investor home loan products, including extending interest-only (IO) terms from 10 years to 15 years for eligible borrowers.
The changes apply to investor loans up to 80% loan-to-value ratio (LVR) and are available to both new and existing customers.
According to the bank, the move is designed to give property investors greater flexibility when managing cash flow, structuring portfolios, and planning long-term investments.
What has changed?
Here’s a simple breakdown of the updates:
- Interest-Only Terms Extended to 15 Years
Eligible investor loans (up to 80% LVR) can now access interest-only repayments for up to 15 years — an increase from the previous 10-year maximum.
- Higher LVR for Investor P&I Loans
Westpac has also increased the maximum LVR for investor Principal & Interest (P&I) loans with Lenders Mortgage Insurance (LMI) from 90% to 95%.
This means eligible investors can now borrow up to 95% of a property’s value without needing to contribute an additional 10% equity.
- Applies to New and Existing Customers
The policy changes apply to:
- New loans
- Top-ups
- Loan increases
Westpac confirmed there are no process changes required, making access to higher borrowing capacity simpler.
What’s excluded?
Some loan types are not eligible for the extended interest-only terms, including:
- LMI waiver loans
- Bullet loans
- National Rental Affordability Scheme (NRAS) loans
- Loans with lower IO caps
Additionally, existing interest-only restrictions still apply to loans originally written above 90% LVR.
Why this matters for property investors
Experts say that the changes could unlock new growth opportunities for investors.
Increasing LVR limits and reassessing servicing buffers may allow investors who were previously capped by borrowing limits to refinance, release equity, or purchase additional properties.
“In a higher rate environment, borrowing capacity typically falls,” she said. “Policy improvements like this can help offset that pressure.”
Longer interest-only terms can also support investors by:
- Improving short-term cash flow
- Preserving liquidity
- Maintaining buffers during uncertain rate cycles
- Funding renovations or deposits
- Avoiding forced sales during downturns
A 15-year IO term may allow investors to hold assets across multiple interest rate cycles while strategically managing repayments.
FAQs: Westpac’s 15-Year Interest-Only Loans
Who is eligible for the 15-year interest-only term?
Investor borrowers with loans up to 80% LVR who meet Westpac’s credit criteria.
Can existing customers access the new policy?
Yes, subject to eligibility requirements.
Has the maximum LVR changed?
Yes. Investor P&I loans with LMI can now go up to 95% LVR.
Does this apply to owner-occupied loans?
The extended IO term applies to investor loans. However, LVR increases may support both investment and owner-occupied lending in certain scenarios.
What does this mean for the property market?
At a time when interest rates remain elevated and borrowing power has tightened, Westpac’s policy shift may provide investors with additional flexibility to grow portfolios without needing substantial income increases.
By extending interest-only terms and lifting LVR caps, the bank is offering investors new ways to manage cash flow, protect equity, and pursue expansion strategies.
As always, investors should consider long-term repayment impacts and seek professional advice before making lending decisions.
Other changes to Westpac Investment house loans.
Westpac will allow property investors to take out interest-only loans with smaller deposits than it previously demanded, as the country’s biggest lender to landlords seeks to lift its mortgage growth. In the latest move by a bank to target the recovering property investor market, Westpac is raising the maximum loan-to-valuation ratio (LVR) for interest-only loans to property investors to 90 per cent, from 80 per cent. This will apply to all Westpac branded house loans.
