It comes down to three questions. Jump to the one that sounds most like you:
- Do you think this property will be worth more in a few years?
- Would you have a better use for the money if you sold?
- Are the repayments what’s really hurting?
If you bought before budget night* and the loan can carry it, holding usually comes out ahead. If the property has started to feel like a weight this year, you’re far from alone, and it’s worth an hour with the numbers before you ring an agent.
Five rate rises this year have pushed many investment loans to 7% or more. Values across the country have fallen every month since March, and Sydney’s have fallen further. Other questions investors are asking us are in rates up, values down.
1. If you think it will be worth more in a few years
Hold, as long as you can carry the loan. Selling now locks in this year’s fall, and selling costs often run to 2.5% to 4% of the price, mostly the agent’s fee and marketing. If you buy back in later, you pay stamp duty again on top.
The test I’d use: would you buy this property today, at today’s price? If you would, the fall is something to wait out. If you wouldn’t, because it has never rented well or it’s in a part of the market you’ve stopped believing in, that’s the property to sell.
2. If you’d have no better use for the money
Hold, especially if you bought before budget night.
An established property you bought before budget night* keeps negative gearing until you sell it, so its losses still come off your other income at tax time. An established property bought after that can only offset its losses against income from property. There’s no swap rule, so if you sell the old one and buy another established property, the replacement falls under the new rules.
So selling makes sense when the money has a better job to do, like paying down your home loan or buying shares, which the negative gearing change doesn’t touch. You may not need to sell to use the equity, either. You can often borrow against it and keep the property you have. How the interest on that borrowing is treated for tax depends on what you use the money for, so run it past your accountant. If a low valuation is capping what you can borrow, see what to do when the valuation comes in low.
The capital gains rules are changing too, but growth up to the changeover* keeps the old 50% discount whenever you sell. That change on its own isn’t a reason to rush a sale. Your accountant can work out what it means for you.
3. If the repayments are what’s hurting
Start by getting your rate down. A lower rate is often enough on its own to make holding affordable, it costs you nothing extra over the life of the loan, and selling is the one move you can’t take back.
Ask your current lender to lower the rate on your investment loan, since existing customers often pay well above the bank’s own new-customer rate. If it won’t move, refinancing elsewhere might. If you’ve already been turned down, read what to do when you can’t refinance your investment loan.
If a lower rate doesn’t close the gap, there are two more things to try. The first is to lower the repayment. You can ask to move to interest only for a few years, or to stretch the loan back out to 30 years. Both cost you more interest over the life of the loan, and on interest only the debt doesn’t go down at all. They buy you time while you get on top of things.
The second, if you own more than one property, is to sell the weaker one and keep the other. That’s usually the one costing the most to hold for the least growth. If your loans are tied together at one bank, it can ask to keep some of the sale money to pay down the other loan, so check that before you list.
What it looks like in dollars
Illustration only, with invented figures. Let’s say you owe $700,000 on your investment property, paying principal and interest with 25 years left. We’ve assumed a rate of 6.5% a year, and 6.7% on interest only.
| Option | Monthly repayment |
|---|---|
| Stay as you are (6.5%, 25 years) | $4,726 |
| Rate lowered to 6.1% | $4,553 |
| Stretch back to 30 years | $4,424 |
| Interest only for five years | $3,908 |
Getting the rate down by 0.4 of a percentage point saves about $173 a month, and you’re still paying the loan off on schedule. Interest only saves more, about $818 a month, but when those five years end you’d be repaying the full $700,000 over the 20 years left, which is about $5,219 a month at 6.5%. So it only works if your income or rent will be stronger by then.
When selling is the right call
If you’ve tried all of that and there’s still a gap each month that your savings would only cover for a year or less, I’d sell, on your own terms, before a missed payment sets the timing for you. What you walk away with is the sale price, less selling costs, the loan payout and any break cost if the loan is fixed. Selling usually lifts your borrowing power too, because the bank counts the full repayment on that loan but only part of the rent.
What we’d do
- Work out which of the three situations above is yours. For some people it’s more than one.
- Check your rate against what the same lender offers new customers today.
- Work out the monthly gap after rent, and how many months your savings would cover it.
- Before you list, check when any fixed rate or interest-only period ends, and whether your loans are tied together.
- Ask your accountant what selling would cost you in tax, including the negative gearing you’d give up.
If you’d like us to look at yours, book a free portfolio review. We’ll run each option through your actual loans and tell you honestly whether holding works.
* Budget night was 7:30pm on 12 May 2026. “Bought before budget night” includes a contract signed before then. The negative gearing limit and the capital gains change both start on 1 July 2027.