5 Fixed Rate Investment Loan Fees You'll Pay

Fixed rate investment loans carry more fees than variable loans.

If you lock a rate on a rental property, you'll pay for the security that brings. Some costs are disclosed upfront, others show up only if circumstances change. You need to know what you're signing on for before the papers are in front of you.

Application and Establishment Fees

Most lenders charge between $300 and $800 to process and establish a fixed rate investment loan. The fee covers credit assessment, valuation, and documentation. A few lenders waive these fees for FIFO borrowers or larger loan amounts, but most do not. You pay this cost at settlement, not at application.

Consider a borrower refinancing an investment loan with a fixed rate. The lender quotes $600 for establishment and $250 for a valuation. Both amounts are deducted from the loan advance at settlement, so the borrower does not need to pay them separately, but they are still added to the loan balance and attract interest over time.

Valuation Fees for Investment Property

Lenders require a formal property valuation for all investment loans. Valuation fees range from $200 to $600 depending on the property type and location. Units and properties in regional South Australia often cost more to value because valuers charge for travel time or local scarcity. Some lenders use automated desktop valuations for refinances in metropolitan areas, which can reduce or remove this fee.

The valuation is a separate cost from the establishment fee. If your property has body corporate records or is part of a recent development, make sure the valuer receives those documents early. Missing paperwork can delay settlement or trigger a second valuation fee.

Fixed Rate Lock or Rate Extension Fees

If you want to lock a fixed rate before settlement, some lenders charge a rate lock fee. The fee is typically $300 to $750 and guarantees the quoted rate for 90 days. If settlement takes longer than 90 days, you may need to pay an extension fee or accept a new rate.

Rate lock fees are more common when interest rates are falling, because lenders expect the cost of funding to drop. They are less common when rates are rising. Not all lenders offer rate locks for investment loans. If your settlement is complicated or involves a property under construction, confirm whether a lock is available and what it costs.

Annual Package or Ongoing Service Fees

Some investment loan products include an annual package fee of $300 to $400. This fee applies whether you choose a variable or fixed rate, but fixed rate loans are less likely to offer discounts or waivers. The package fee typically provides access to offset accounts, lower interest rates, or additional features such as redraw.

If your fixed rate loan does not include an offset account, the package fee may not deliver value. Offset accounts do not work with most fixed rate products. Check what the fee pays for before you commit. If you are paying $395 per year for features you cannot use, a loan without a package fee will cost less.

Break Costs on Fixed Rate Investment Loans

Break costs apply if you exit a fixed rate loan before the fixed period ends. This includes refinancing, selling the property, or making a lump sum payment above the allowed threshold. Lenders calculate break costs using the difference between your fixed rate and the wholesale rate at the time of exit. If rates have fallen since you locked your rate, the break cost can be substantial.

In a scenario where a FIFO worker locked a five-year fixed rate at 6.2 per cent and wants to refinance two years later when wholesale rates have dropped to 4.8 per cent, the lender has lost income it expected to earn over the remaining three years. The break cost compensates the lender for that loss. The calculation involves complex formulas based on loan balance, remaining term, and rate differential. For a $400,000 loan with three years remaining, the break cost could range from $8,000 to $20,000 depending on how far rates have moved.

Break costs are disclosed in your loan contract, but the formula is not transparent until you request a payout figure. Some lenders allow partial prepayments of up to $10,000 or $20,000 per year without triggering break costs. If you expect to sell or refinance before the fixed term ends, confirm the prepayment allowance and how break costs are calculated. You can also check whether your lender offers a portable fixed rate loan, which lets you transfer the fixed rate to a new property without paying break costs.

Settlement and Legal Costs

Settlement fees are charged by your lender or settlement agent and typically cost $150 to $350. Legal fees depend on whether you use a solicitor or conveyancer and whether the transaction is straightforward. Investment property purchases in South Australia also attract stamp duty, which is calculated on the purchase price and is not deductible as a holding cost. Stamp duty is separate from loan fees but is part of your upfront cost.

If you are using equity release from an existing property to fund the deposit, your solicitor may need to prepare additional documentation for the discharge and the new security. This adds to your legal costs. Budget for $1,500 to $2,500 in combined settlement and legal fees for a standard investment property transaction.

How FIFO Income Affects Fixed Rate Pricing

Lenders treat FIFO income differently depending on the employer, contract type, and whether you are salaried or on daily rates. Some lenders apply a loading to the interest rate for FIFO borrowers, particularly on investment loans. The loading is typically 0.10 to 0.25 percentage points and applies to both fixed and variable rates. Not all lenders charge this loading. If you work for a Tier 1 mining company on a permanent roster, you are more likely to access standard pricing.

When comparing fixed rate investment loan options, ask whether FIFO income attracts a rate loading and whether that loading is waived for certain employers or loan sizes. A home loan for South Australia FIFO workers often requires more documentation than a standard application, so expect to provide roster details, payslips showing allowances, and a letter from your employer confirming continuity.

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