Fixed Rate Investment Loans

Most lenders do not offer offset on fixed investment loans. A handful of lenders (fewer than 10% of the panel) allow a partial offset during the fixed term, but the offset balance is capped and the rate premium is higher. If offset is critical—because you’re parking rental income or business cash—stick with a variable loan or split: part fixed (no offset), part variable (with offset).

You’ll pay a break cost if the lender’s wholesale interest rate has fallen since you fixed. The lender calculates the present value of the interest shortfall for the remaining fixed period. Break costs range from $0 (if rates rose) to $10,000+ on a $500k loan (if rates fell 1%). Andy orders a break-cost estimate before you list, so you know the exit penalty upfront and can decide whether to wait or sell now.

Yes, up to the lender’s annual cap—commonly $10,000–$30,000/year without penalty. Repayments above the cap trigger a break-cost calculation. The extra payments reduce principal but don’t lower your fixed monthly repayment; they shorten the loan term after the fixed period expires.

1 year if you expect rate cuts soon or might sell within 18 months. 3 years if you’re holding medium-term and want a balance of certainty and flexibility—this is the most popular investor term. 5 years if you’re building long-term passive income, you’re certain you’ll hold, and you want zero rate surprises. Longer terms carry higher rates (0.3%–0.5% premium over variable) and larger break costs if you exit early.

A break cost is the fee the lender charges if you exit a fixed loan early (sell, refinance, or repay above the annual cap). It’s calculated using the Economic Cost Method: the lender compares your fixed rate to the current wholesale rate for the remaining term. If wholesale rates have fallen, you owe the interest difference (potentially $3,000–$20,000 depending on loan size and time remaining). If rates have risen, break cost = $0. Andy requests a formal estimate before you make any move.

Yes, but you’ll pay a break cost to your current lender to exit the fixed term, plus any discharge and application fees. Refinancing makes sense if the rate saving with the new lender (plus any cashback) exceeds the break cost and fees. Andy calculates the breakeven: if your current fixed rate is 6.49% with 2 years remaining, and a competitor offers 5.89% variable, the 0.6% saving might cover a $4,000 break cost in 8–12 months.

Yes. Fixed investment loan rates are typically 0.2%–0.4% higher than equivalent owner-occupier fixed rates, because lenders see investment loans as higher risk (rental income can drop, vacancy can occur). The gap is consistent across all fixed terms. You can’t get an owner-occupier rate on an investment property—lenders verify loan purpose at application and settlement.

30–90 days before expiry, the lender sends a rollover letter with current fixed and variable rates. You can re-fix for another term (1–5 years), switch to variable, or refinance to a new lender. If you do nothing, the loan automatically moves to the lender’s standard variable investment rate—usually 0.3%–0.6% higher than their best variable rate. Andy reviews your options 60 days out so you’re not stuck on the default rate.

Only by paying the break cost. Some lenders allow an internal switch (from fixed to variable within the same loan) without a full refinance, but the break cost still applies. It’s the same calculation as if you were refinancing or selling. Switching makes sense only if rates have risen significantly since you fixed, so the break cost is zero or minimal, and you now want offset/flexibility.

Yes. Most lenders offer interest-only during the fixed term (1–5 years), then revert to principal-and-interest when the fixed term expires unless you negotiate an extension. Interest-only investment loans are common because they maximise your tax deduction and minimise monthly outflow. The interest-only period matches the fixed term—if you fix for 3 years, you get 3 years interest-only, then it switches to P&I at rollover.

Most lenders tier fixed rates by LVR: loans above 80% LVR pay a premium (commonly +0.2%–0.4%) because they carry lenders mortgage insurance (LMI). Below 80% LVR, you get the standard fixed rate. If you’re at 85% LVR and paying LMI, the fixed rate might be 6.49% instead of 6.19%. Once your LVR drops below 80%—either through property appreciation or principal paydown—you can refinance to a lower rate.

Yes—most lenders allow a loan split. Common approach: 50% fixed (for rate certainty), 50% variable (for offset and extra repayments). You nominate the split at application or refinance. Each portion has its own loan account, rate, and fee structure. The fixed portion locks in your base holding cost; the variable portion gives you flexibility to make lump-sum payments or use offset for tax-free savings. Andy sets up splits for investors who want both stability and liquidity.