Fixed rate investment home loans

author-avatar By
on September 15, 2021
Fixed rate investment home loans

Many investors choose fixed rate home loans for repayment certainty. Find out if a fixed rate is right for you and your investment property.

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time. It is common for a loan to be a fixed rate loan for a period of one to five years, before it changes to a variable rate. The advantage of a fixed rate is that during the fixed term, you know exactly how much your repayments will be.

If you’re new to the market and don’t feel comfortable taking any risks then you may want to consider choosing a fixed rate home loan, much like many new property investors do for the first several years of their investment property loan.


Advertisement

Buying an investment property or looking to refinance? The table below features home loans with some of the lowest fixed interest rates on the market for investors.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Investor, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Investor, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
NO UPFRONT OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Investment) (LVR < 80%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Unlimited extra repayments
NO UPFRONT OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Investment) (LVR < 80%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Unlimited extra repayments
VariableMore details
AN EASY ONLINE APPLICATION

Yard Investment Loan (Principal and Interest) (LVR < 80%)

  • No application fee
  • Unlimited additional repayments
  • Unlimited free redraws
AN EASY ONLINE APPLICATION

Yard Investment Loan (Principal and Interest) (LVR < 80%)

  • No application fee
  • Unlimited additional repayments
  • Unlimited free redraws
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Investor, Interest Only (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Investor, Interest Only (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of December 7, 2021. View disclaimer.

Advantages of fixed rate investment loans

The key advantage of a fixed rate loan is repayment certainty. By knowing exactly what your repayments will be, you’ll be able to budget for the future. This factor often makes fixed rate home loans very popular for investors over the first two to three years of owning a property. This enables investors to get off the ground and find tenants without worrying about their repayments going up.

Disadvantages of fixed rate investment loans

The downside to an interest rate being locked in for a length of time is that it’s locked-in. This probably goes without saying, but there’s a few considerations:

  • Interest rates could drop: If interest rates drop, chances are you could be paying too much on your home loan, and it’s tempting to switch, but…

  • Break fees could apply: Break fees often occur if you break out of a fixed loan term early. This fee, payable to your lender, is often a calculation based on the difference in interest rates, and how long you are into the home loan. This could add up to many thousands of dollars, negating any benefit of refinancing.

Another disadvantage is that there is often less flexibility with a fixed rate loan. One example of this is additional repayments. There could be penalties for making additional repayments beyond the allowed limit - usually the allowed limit is up to $10,000 but check with your lender to make sure. Because of this, the ability to redraw or add an offset account might not be offered on a fixed rate loan, effectively reducing the flexibility of the loan.

Fixed rate investment home loans can present a useful opportunity to have repayment certainty while starting a new investment property, but there are some considerations to keep in mind.


Image via Nathan Van Egmond via Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

Latest Articles

author-avatar
Aaron joined Savings.com.au in 2021. He is a finance journalist with a keen interest in property, the share market, and improving financial literacy in young Australians.

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree to the Savings Privacy Policy