What fees come with a variable rate investment loan?
A variable rate investment loan typically includes an application fee, valuation fee, settlement fee, ongoing monthly account keeping fees, and annual package fees if bundled with other products. Some lenders charge all of these, while others waive certain costs to win your business.
Consider a property investor in St Marys purchasing a unit near the Station Street precinct with an 80% loan to value ratio. The upfront fees alone might include a $600 application fee, a $300 valuation fee, and a $150 settlement fee. That's over $1,000 before the loan even settles. On top of that, if the lender charges a $10 monthly account keeping fee, you're paying $120 each year just to have the loan open.
Some lenders waive the application fee entirely if you apply through a broker, and others include the valuation in their package. Before you compare interest rates, compare the fees that sit underneath them. Two loans with identical rates can cost you hundreds of dollars apart once you factor in what you're paying just to access the product.
How much does Lenders Mortgage Insurance add to your loan?
Lenders Mortgage Insurance is charged when your deposit is less than 20% of the property value. The cost varies based on your loan to value ratio and the size of your loan, and it's typically added to your loan balance rather than paid upfront.
In a scenario where a St Marys investor borrows with a 10% deposit, LMI might add several thousand dollars to the total loan amount. If your loan amount sits around the median property value for investment stock in the area and your deposit is only 10%, LMI could cost anywhere from $8,000 to $15,000 depending on the lender's insurer and your loan size. That amount is capitalised into the loan, so you're paying interest on it for the life of the borrowing.
Some lenders offer reduced or waived LMI for certain professions or through specific products. If you're refinancing an existing investment loan and your equity has grown, you may avoid LMI altogether on the new loan. It's worth running the numbers with a broker before assuming you'll need to pay it. Investment loan refinancing can sometimes sidestep this cost entirely if your property has increased in value since purchase.
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Are there fees for making extra repayments on a variable rate loan?
Most variable rate investment loans allow unlimited extra repayments without penalty. This is one of the key reasons investors choose variable over fixed, particularly if they plan to use surplus income or rental returns to reduce the principal.
If you're holding a variable rate loan on an investment property in St Marys and your tenant is covering most of your repayment, any additional cash flow you direct toward the loan reduces your principal without triggering a fee. Some lenders do cap extra repayments at a certain amount per year even on variable products, so check the terms before assuming full flexibility.
Fixed rate loans, by contrast, typically limit extra repayments to around $10,000 or $20,000 per year. Going beyond that triggers break costs, which can run into thousands of dollars depending on rate movements. Variable loans avoid this problem entirely, which is why they suit investors who want the option to pay down debt quickly or access equity as their portfolio grows. If you're planning to expand your property portfolio, keeping your loan structure flexible is often more valuable than locking in a rate.
What ongoing fees should you budget for?
Beyond the upfront costs, variable rate investment loans often come with monthly account keeping fees, annual package fees, and fees for redraw or offset account access. These costs vary significantly between lenders.
A loan with a $395 annual package fee and a $10 monthly account keeping fee will cost you $515 per year just to maintain the account. Over a 30-year loan term, that's over $15,000 in fees alone, assuming no fee increases. Some lenders charge nothing for account keeping but include higher package fees. Others waive all fees if you hold a certain loan balance or bundle your home and investment loans together.
If you're comparing two lenders and one charges $500 per year in fees while the other charges nothing, that difference compounds quickly. Even if the no-fee lender has a rate that's 0.05% higher, the fee-free structure might still be cheaper over time depending on your loan size. Run the full cost comparison, not just the advertised rate.
How do discharge fees work when you sell or refinance?
A discharge fee is what the lender charges to release the property title when you sell or refinance. This fee typically ranges from $150 to $400 depending on the lender, and it's payable at settlement.
If you're an investor in St Marys who decides to sell a property near Queen Street or refinance to release equity for another purchase, the discharge fee is deducted from your settlement funds. Some lenders also charge a government registration fee on top of the discharge fee, which can add another $100 to $200 to the total.
These fees are often overlooked when investors calculate their exit costs, but they add up quickly if you're actively managing a portfolio. If you refinance every few years to chase lower rates or access equity, you'll pay discharge fees each time unless your lender waives them as part of a retention offer. Factor this into your long-term strategy, especially if you're planning to grow your holdings and need to move loans around regularly.
Do all lenders charge the same fees for investment loans?
Lenders vary widely in how they structure fees. Some charge high upfront costs but low ongoing fees, while others do the opposite. A few lenders offer fee-free products with slightly higher interest rates, and others waive fees entirely if you meet certain criteria like a large loan balance or professional occupation.
In our experience, investors often focus on the interest rate and miss the fee structure entirely, which can mean paying hundreds or even thousands more over the life of the loan. A lender that charges no application fee, no valuation fee, no monthly account keeping fee, and no annual package fee might be a better option than a lender with a lower rate but $600 in fees each year.
When you're ready to compare your options, it's worth speaking to someone who can show you the full cost breakdown across multiple lenders. Investment loans aren't one-size-fits-all, and the right fee structure depends on how you plan to manage your property and whether you're likely to refinance or sell in the short to medium term.
Call one of our team or book an appointment at a time that works for you. We'll walk through the fee structures that apply to your situation and show you which lenders offer the most value based on how you plan to use the loan.
Frequently Asked Questions
What upfront fees are charged on a variable rate investment loan?
Upfront fees typically include an application fee, valuation fee, and settlement fee. Some lenders waive the application fee if you apply through a broker, and others include the valuation in their package.
Do I have to pay Lenders Mortgage Insurance on an investment loan?
LMI is charged when your deposit is less than 20% of the property value. The cost varies based on your loan to value ratio and loan size, and it's usually added to your loan balance rather than paid upfront.
Can I make extra repayments on a variable rate investment loan without penalty?
Most variable rate investment loans allow unlimited extra repayments without penalty. This is a key advantage over fixed rate loans, which typically cap extra repayments and charge break costs if you exceed the limit.
What ongoing fees should I expect to pay?
Ongoing fees often include monthly account keeping fees, annual package fees, and fees for redraw or offset account access. These costs vary significantly between lenders, so it's important to compare the full fee structure, not just the interest rate.
How much does a discharge fee cost when I sell or refinance?
Discharge fees typically range from $150 to $400 depending on the lender. Some lenders also charge a government registration fee on top of the discharge fee, which can add another $100 to $200 to the total cost.
