Do you know Fixed Rate Investment Loan Fees and Costs?

Fixed rate investment loans come with specific fees and costs that differ from variable rate products. Knowing these charges upfront lets you compare loan products accurately and budget for the total cost of your borrowing, not just the advertised rate.

Application and Establishment Fees on Fixed Rate Investment Loans

Most lenders charge an application fee when you apply for a fixed rate investment loan, typically ranging from $300 to $800. Some lenders waive this fee during promotional periods, while others bundle it with an establishment fee that can reach $600. The establishment fee covers the administrative work of setting up your loan, including valuations, legal checks, and documentation. These upfront costs apply whether you are buying a new investment property or refinancing an existing one. Consider a property investor refinancing a rental property in Brisbane who switches from a variable to a fixed rate loan. The lender charges a $600 establishment fee and a $300 application fee, bringing the total upfront cost to $900 before any other charges. That $900 is typically added to the loan balance rather than paid separately, which increases the total amount you are borrowing and the interest charged over time. If you are comparing investment loan options from multiple lenders, check whether these fees are waivable or negotiable, as some brokers can access lender promotions that reduce or eliminate them.

Break Costs: The Penalty for Exiting a Fixed Rate Early

Break costs apply if you repay, refinance, or make extra repayments beyond your allowed limit before the fixed rate term ends. The break cost compensates the lender for the difference between the fixed rate you agreed to and the current wholesale funding rate. If wholesale rates have dropped since you fixed, the break cost can be substantial. In our experience, break costs regularly catch property investors off guard when they decide to sell or refinance mid-term. As an example, a Queensland investor locked in a three-year fixed rate at 5.8% on a loan amount of $450,000. Eighteen months later, wholesale rates have fallen and the investor wants to refinance to access equity for a second property. The lender calculates a break cost of $12,000 based on the rate differential and the remaining term. That $12,000 is due immediately, either paid upfront or added to the new loan balance. Some lenders allow partial break cost waivers if you refinance within their own product suite, but this is not standard across all institutions. Always request a break cost estimate from your lender before committing to an early exit, especially if you are planning to sell or restructure within the fixed term.

Ongoing Account Fees and Package Fees

Fixed rate investment loans often carry a monthly account-keeping fee, usually between $10 and $15 per month. This fee applies regardless of whether you make additional repayments or draw on a redraw facility. Some lenders offer fixed rate loans as part of a packaged product that includes a home loan, transaction account, and credit card for an annual package fee of $350 to $400. The package fee may deliver value if you hold multiple loans or accounts with the same lender, as it can unlock interest rate discounts and waive certain transaction fees. For a single investment property loan, the package fee rarely justifies the cost unless you are also refinancing your owner-occupied home with the same institution. Check whether the monthly account fee is fixed for the duration of your fixed rate term or subject to annual increases, as this can affect your budgeting over a three- or five-year period.

Valuation and Settlement Costs

Lenders require a property valuation before approving a fixed rate investment loan, and the cost is usually passed to you. Valuation fees range from $200 for a standard residential property to $600 or more for rural or commercial properties. Settlement costs, including government registration fees and lender legal fees, typically add another $500 to $1,200 depending on the state and the complexity of the transaction. In Queensland, the Office of State Revenue charges a fee to register the mortgage, and this fee increases with the loan amount. If you are purchasing an established property, you also need to account for stamp duty, which is not a lender fee but is a significant upfront cost that affects your overall borrowing capacity. Lenders generally do not include stamp duty in the loan amount, so you will need to cover this from your own savings or equity release. If you are using equity from an existing property to fund your deposit, the valuation fee applies to both the new purchase and the property being used as security, doubling the valuation cost.

Discharge Fees When the Fixed Term Ends

A discharge fee applies when you repay the loan in full or switch to a different lender at the end of the fixed rate term. This fee covers the administrative cost of removing the mortgage from the property title and typically ranges from $300 to $500. Some lenders waive the discharge fee if you switch to another product within their own range, such as moving from a fixed rate to a variable rate loan at the end of the fixed term. If you plan to hold the investment property long-term and intend to refinance once the fixed rate expires, factor the discharge fee into your comparison of new loan products. The discharge fee is separate from any break cost, so even if you wait until the fixed term ends, you will still pay this fee when you move to a new lender. For investors holding multiple properties, discharge fees can accumulate quickly if you are restructuring several loans at once.

Lenders Mortgage Insurance on Fixed Rate Investment Loans

Lenders Mortgage Insurance is charged when your loan to value ratio exceeds 80%, and it protects the lender if you default on the loan. LMI is a one-off cost that can range from a few thousand dollars to over $20,000 depending on your loan amount and deposit size. The premium is calculated as a percentage of the loan amount and increases sharply once your LVR passes 85%. LMI is not a lender fee in the traditional sense, but it is a cost imposed by the lender and is usually capitalised into the loan balance. For fixed rate investment loans, LMI is calculated at the time of approval and does not change if you switch to a variable rate later. Some lenders allow you to transfer your existing LMI policy if you refinance within a certain period, which can save you from paying a second premium. If you are purchasing an investment property with a smaller deposit, request an LMI quote early in the application process so you can assess whether the total upfront cost remains within your budget.

Fixed rate investment loans offer certainty over repayments, but the fees and costs can vary widely between lenders. Understanding the full cost structure, from application fees through to break costs and discharge fees, lets you compare loan products on a level field and avoid unexpected charges during the fixed term. Call one of our team or book an appointment at a time that works for you to review your specific borrowing scenario and access investment loan options from lenders across Australia.

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