Variable Rate Investment Loans & the Fees You'll Pay

Variable rate investment loans carry a different fee structure than owner-occupier lending, and understanding which costs are standard versus negotiable can shift your annual outlay by several thousand dollars.

Application and Valuation Costs Before Settlement

Most lenders charge an application fee between $300 and $600 when you apply for an investment loan. Some waive this cost during promotional periods, but you should expect to pay it unless your broker confirms a current exemption. Valuation fees sit separately and range from $200 to $400 depending on property location and type. Wilston's proximity to the CBD typically places it in the lower valuation band, though units with complex body corporate structures can push the cost higher. These two charges appear before settlement, so they form part of your upfront cash requirement alongside your deposit and stamp duty.

Settlement fees and legal costs for property transfer add another $1,500 to $2,500. These are separate from your loan costs but often get grouped together when buyers calculate how much cash they need beyond the deposit. If you're buying in Wilston and using equity from an existing property, you may also pay a discharge fee on the original loan, typically $150 to $350.

Ongoing Account Fees and When They Apply

Variable rate investment loans usually carry a monthly account-keeping fee of $10 to $15, which appears as a separate debit on your loan statement. Some lender packages waive this fee if you maintain a linked transaction account or hold multiple products with the same institution. Not all variable products include this fee, so it's worth comparing total cost rather than just the interest rate. Over a 30-year loan term, a $15 monthly fee adds up to $5,400 in unproductive costs.

Some lenders also charge an annual package fee, typically $300 to $400, in exchange for a discounted interest rate and access to offset accounts or redraw facilities. Whether this fee delivers value depends on your rate discount and how actively you use the loan features. If the package saves you 0.20% on a $500,000 loan, the annual interest saving is $1,000, which justifies a $300 fee. If the discount is only 0.10%, the saving drops to $500 and the package may not be worth it.

Lenders Mortgage Insurance and How LVR Affects Cost

Lenders Mortgage Insurance becomes payable when your loan to value ratio exceeds 80%. For investment lending, LMI thresholds are stricter than owner-occupier loans, and some lenders cap investment LVRs at 90% even with insurance. On an investment property valued at $800,000 with a 10% deposit, your LVR would be 90% and LMI could cost between $18,000 and $25,000 depending on the lender and your employment status. This cost can be capitalised into the loan amount, but doing so increases your interest expense over the life of the loan.

LMI is a one-time cost that protects the lender, not you, so avoiding it by reaching an 80% LVR should be the priority if your deposit allows. In Wilston, where many investors are upgrading within an existing portfolio, using equity from another property to reach an 80% LVR often makes more financial sense than paying LMI to preserve cash. If you're considering this approach, reviewing your borrowing capacity across multiple properties will show whether you have enough serviceability to support the additional lending.

Break Costs, Exit Fees, and Discharge Charges

Variable rate loans don't carry break costs because you're not locked into a fixed term, but some lenders still charge an exit fee if you repay or refinance within the first one to three years. This fee typically ranges from $200 to $700 and is designed to recover the lender's upfront acquisition costs. If you're likely to refinance or sell within a short period, confirm whether an exit fee applies and factor it into your comparison.

Discharge fees apply when you close the loan or switch lenders, usually between $150 and $350. This is a standard administrative cost and appears on most variable rate products. If you're planning to refinance after a few years to access equity or secure a lower rate, the discharge fee on your existing loan plus the application fee on the new loan should be weighed against the rate saving you'll achieve.

Offset Accounts, Redraw Facilities, and Feature-Related Costs

Most variable rate investment loans include either an offset account or a redraw facility at no extra charge, but some lenders charge $10 to $20 per month for an offset linked to an investment loan. An offset account reduces the interest you pay by offsetting your savings balance against the loan principal, which is particularly useful if you're managing multiple properties or holding cash reserves for vacancy periods. In our experience, Wilston investors who hold offset balances of $20,000 or more see measurable interest savings that justify any monthly fee.

Redraw facilities let you withdraw extra repayments you've made, but some lenders charge $10 to $50 per redraw transaction. If you plan to make lump sum payments and redraw regularly, confirm the redraw fee structure before settling on a product. For investors using interest-only repayments to maximise tax deductions, redraw features are less relevant since you're not making principal payments.

Line of Credit Fees and Portfolio Lending Structures

If you're building a portfolio across multiple properties, some lenders offer line of credit facilities that allow you to draw and repay funds as needed. These products typically charge higher monthly fees, often $20 to $30, and may include transaction fees each time you draw down. Line of credit structures suit investors who are acquiring properties in quick succession or need flexible access to equity, but they add complexity and cost that aren't justified for a single investment property.

When you hold multiple investment loans, some lenders offer portfolio discounts that reduce your interest rate by 0.05% to 0.15% for each additional property financed with them. This can offset the ongoing account fees across your portfolio, but it also concentrates your lending with one institution, which may limit your refinancing options later. Comparing total fee load across all properties is more useful than optimising each loan in isolation.

How Rental Income Declarations Affect Serviceability Fees

Lenders typically assess rental income at 75% to 80% of the lease amount when calculating your borrowing capacity, which accounts for vacancy periods and maintenance costs. Some lenders charge a fee to update rental income details mid-term if you increase the rent or secure a new tenant, though this is uncommon. Where fees do appear is in ongoing property management costs, which aren't lender fees but do affect your cash flow and serviceability. Wilston's vacancy rate has remained low due to proximity to Lutwyche Shopping Centre and Newmarket train station, but factoring in at least one to two months of vacancy per year when calculating affordability will prevent serviceability issues if rental income drops temporarily.

If you're claiming negative gearing benefits, your accountant's fees for preparing tax returns with rental schedules and depreciation claims are another ongoing cost. These aren't loan fees, but they're part of the total expense structure for property investment and should be included when you calculate whether the investment generates the returns you need.

What Fundfin Clients Should Confirm Before Applying

Before submitting your investment loan application, request a full fee schedule from your broker. This should list application fees, valuation costs, ongoing account fees, LMI estimates at different LVRs, discharge fees, and any package or feature costs. Compare at least three lenders on total cost over a two-year period, not just the advertised rate. A loan with a 0.10% lower rate but $500 in annual fees may cost more overall than a slightly higher rate with no ongoing charges.

If you're buying in Wilston and holding other properties elsewhere, check whether your lender applies cross-collateralisation, which links multiple properties under one loan facility. This can reduce fees but makes it harder to sell or refinance individual properties later. Keeping each property on a separate loan gives you more control, even if it means paying multiple account-keeping fees.

Call one of our team or book an appointment at a time that works for you to review your full fee structure and confirm which costs can be reduced or removed based on your deposit size and lender choice.

Frequently Asked Questions