Refinancing an investment property is definitely possible—and it can be a smart move to improve cash flow, access your property’s equity, or better manage your finances. When you refinance, you replace your current mortgage with a new loan, often to save money or tap into your property’s value. Here’s what you need to know.
Why Would I Refinance an Investment Property?
Lower Your Interest Rate
Investment loans usually have higher rates than primary home loans because lenders see more risk. But if your rental property is cash flow positive and your finances are strong, refinancing can help you get a better rate and lower your monthly payments.
Change Your Loan Term
You can shorten your loan term to pay off the mortgage faster—meaning higher monthly payments but less interest overall. Or you can lengthen the term to lower your payments if money is tight. Switching from an adjustable to a fixed-rate mortgage is also common for stability.
Borrow Your Equity
Equity is what you own outright—the difference between your property’s value and what you owe. With enough equity, refinancing lets you borrow against it to fund repairs, pay off debt, or invest in more properties.
Increase Rental Income
Use refinancing to fund upgrades like new appliances, extra living space, or a roof repair, which can help you charge higher rent and boost your property’s value.
Fund More Investments
Tap into your equity to put a down payment on another investment property and grow your portfolio.
Use the Cash for Almost Anything
From consolidating debt to funding college tuition or home improvements, refinancing gives you flexibility in how you use the money.
How Do I Refinance an Investment Property?
- Build Equity
Lenders typically want you to have at least 25% equity in your property before refinancing. - Gather Your Documents
Get your pay stubs, tax returns, insurance info, asset statements, and title documents ready. - Shop Around and Apply
Compare rates from different lenders to find the best deal, then apply and submit your paperwork promptly. - Lock Your Rate
After approval, lock your interest rate to protect against market changes. - Underwriting and Appraisal
Your lender will verify your finances and appraise the property’s current value. - Close Your Loan
Sign the final documents and, if borrowing equity, get your funds shortly after.
Bottom Line
Yes, you can refinance an investment property—and doing so can help you save money, free up cash, or grow your investments. The process is generally simpler than buying a new home, making it an accessible option if it fits your goals.
Thinking about refinancing? It could be the right step for your investment strategy!
