Do you know what fees hit variable rate investor loans?

Most lenders advertise the interest rate in big numbers but bury the fee schedule in a twelve-page product disclosure statement.

If you're weighing up variable rate loans for a rental property, the real cost sits in three buckets: what you pay to get the loan, what you pay each year to keep it, and what you might pay if circumstances change. The difference between a low-fee product and a high-fee product can be a few thousand dollars over the life of the loan, and that gap widens when you own more than one property.

Application and establishment fees

These are one-off charges the lender collects when you settle. Establishment fees range from zero to around $600 depending on the lender, and some banks waive them during promotional windows or for refinances. You'll also see valuation fees between $200 and $400, though a few lenders absorb this cost. Settlement fees sit around $150 to $300, and if you're buying in a different state to where the lender's settlement team operates, an additional agent fee sometimes applies.

Consider someone refinancing two rental properties at the same time. One lender charges a $600 establishment fee per loan, a $300 valuation per property and $200 settlement per loan. The other lender waives establishment and settlement fees and caps valuations at $200 each. The difference is $2,200 in upfront costs before a single repayment is made. That saving can cover body corporate fees for six months or part of an insurance premium, and it doesn't require a lower rate to deliver value.

Ongoing account fees

Most variable rate investment loans carry a monthly or annual account-keeping fee. This typically ranges from $10 to $15 per month, so $120 to $180 each year per loan. Some lenders bundle offset account access into that fee, others charge separately for offset facilities at around $10 per month per account. If you hold three investment properties and each loan includes an offset account with a separate fee, you're paying close to $700 a year in account-keeping charges alone.

Package fees are another layer. A few lenders offer a professional package that discounts the interest rate by 0.60 to 0.80 percentage points in exchange for an annual package fee of $350 to $400. Whether that trade works in your favour depends on the loan amount. On a $400,000 loan, a 0.70 percentage point discount saves around $2,800 a year in interest, so the $395 package fee still leaves you $2,400 better off. On a $200,000 loan, the saving halves and the fee stays the same, so the net benefit shrinks to around $1,000. When refinancing or adding properties to your portfolio, run the numbers on every package separately rather than assuming the discount always pays for itself.

Offset accounts and redraw facilities

Variable rate products usually offer one or both of these features, and the fees differ. An offset account linked to an investment loan lets you park rental income or surplus cash to reduce the interest charged without reducing the deductible loan balance. Some lenders include offset access in the base account fee, others charge $5 to $15 per month per offset account. If you're using multiple offset accounts to separate rent from different properties, those fees add up quickly.

Redraw facilities let you pull back extra repayments you've made above the minimum. Most lenders allow free redraw through online banking, but a few still charge $10 to $50 per redraw request if you process it over the phone or at a branch. We regularly see investors caught by this when they need access to funds quickly and don't realise the channel matters. Before settling, confirm whether online redraw is unlimited and whether there's a minimum redraw amount, because some lenders won't let you withdraw less than $500 at a time.

Discharge and exit fees

When you sell the property or refinance to another lender, the current lender charges a discharge fee to release the mortgage. This fee usually sits between $300 and $500 per loan. If you own four rental properties and refinance all of them in a single round, you'll pay $1,200 to $2,000 in discharge fees to the outgoing lender, plus establishment and settlement fees to the new one. Exit fees, which used to be common, are now banned on home loans entered into after 1 July 2011, so you won't see them on modern investment loans.

Lenders Mortgage Insurance on variable rate loans

Lenders Mortgage Insurance is a cost rather than a fee, but it behaves like a large establishment charge if your deposit is below twenty per cent. LMI protects the lender if you default, and the premium is calculated on the loan amount and loan-to-value ratio. On an investment property with a ten per cent deposit, LMI can run from $10,000 to $30,000 depending on the purchase price and lender. Most borrowers capitalise this into the loan, which means you're also paying interest on the premium over the life of the loan.

Some lenders charge lower LMI premiums than others because they use different insurers or negotiate volume discounts. If you're comparing two variable rate products with similar interest rates and you need to borrow above eighty per cent, ask for an LMI quote from each lender before you apply. A difference of $3,000 in the premium is not unusual, and that gap widens if you're refinancing multiple properties at high loan-to-value ratios.

Early repayment and break costs

Variable rate loans do not carry break costs when you repay early or refinance, which is one reason they suit investors who expect to sell or restructure within a few years. You can make extra repayments, pay the loan down completely, or switch lenders without penalty. Fixed rate products, by contrast, can charge tens of thousands of dollars in break costs if you exit before the fixed term ends, especially when rates have fallen since you locked in.

That flexibility matters when your circumstances or the regulatory environment shift. The negative gearing rules that take effect in July 2027 mean some investors will want to sell properties acquired after May 2026 before that date, or refinance to access equity for a new build that retains full negative gearing. A variable rate loan lets you make those moves without paying a break cost, whereas a three-year fixed term that runs past mid-2027 could lock you into a structure that no longer suits your tax position.

Comparison rate limitations for investors

Lenders must publish a comparison rate that rolls the interest rate and standard fees into a single figure, but the comparison rate is calculated on a $150,000 owner-occupied loan over 25 years. Investment loans are often larger and may be interest-only for part of the term, so the comparison rate understates the impact of fixed-dollar fees. A $395 annual package fee has a bigger percentage impact on a $150,000 loan than on a $600,000 loan, which means the comparison rate can make a low-rate, high-fee product look worse than it actually is for large balances.

When comparing variable rate investment loan options, calculate the total cost over your expected holding period using your actual loan amount, repayment type and likely extra repayment behaviour. That gives you a dollar figure you can compare across lenders rather than relying on a standardised rate that doesn't match your scenario.

Rate discounts and ongoing fee waivers

A handful of lenders link the interest rate discount to the number of loans you hold or the total value of your portfolio. Once you cross two or three properties with the same lender, you might receive an additional 0.10 to 0.15 percentage point discount or a waiver of monthly account fees. Others offer tiered package fees where a single annual charge covers all loans in your portfolio instead of charging per loan.

In our experience, these portfolio discounts are rarely advertised on rate sheets and usually require a phone call to the lender's broker desk to confirm. If you're planning to grow a portfolio beyond two properties, it's worth comparing not just the rate and fees on the first loan but also what the pricing looks like at three, four or five loans with that lender. Switching lenders every time you buy a new property can mean you never reach the threshold where discounts apply, and you pay full fees across a fragmented portfolio.

Switching between interest-only and principal-and-interest

Most variable rate investment loans let you switch from interest-only to principal-and-interest repayments, or vice versa, once during the loan term without charge. Some lenders allow unlimited switches, others charge $50 to $150 per change after the first. If your rental income is tight and you want the option to flip between repayment types as vacancy rates change or tax rules shift, confirm the fee schedule before you settle. The ability to move to principal-and-interest repayments without cost matters particularly after July 2027, when properties acquired after May 2026 will no longer deliver tax-deductible losses against wage income unless they qualify as new builds.

For investors holding a mix of grandfathered properties and post-May 2026 purchases, the capacity to adjust repayment structures across different loans without fees creates room to manage cash flow as rental income and tax treatment diverge across the portfolio. A lender that charges $100 every time you switch repayment type on a $500,000 loan adds friction to decisions that might need to happen once or twice a year, especially if vacancy or interest rate movements squeeze your buffer.

What to compare before you apply

Look at the product disclosure statement and fee schedule together, not just the rate. Write down establishment fees, valuation and settlement costs, monthly account-keeping fees, offset or redraw fees, package fees, and discharge fees. Multiply monthly fees by twelve and add package fees to get an annual running cost per loan. Then multiply that by the number of properties you expect to hold with that lender over the next few years.

If two lenders are within 0.10 percentage points on rate but one charges $400 a year in ongoing fees and the other charges $150, the lower-fee lender is usually cheaper unless the loan amount is very large. On a $300,000 loan, a 0.10 percentage point rate difference costs about $300 a year, so the $250 annual fee difference outweighs the rate gap. On a $700,000 loan, the rate difference costs around $700 a year, so the higher-fee lender pulls ahead if the rate is lower.

Call one of our team or book an appointment at a time that works for you. We'll pull the current fee schedules from the lenders that suit your borrowing capacity and deposit, and run the numbers for your actual loan amount and property type so you can see the total cost over one year, three years and five years. That way, the decision sits on what you'll actually pay rather than what the advertised rate suggests.

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