When buying an investment property in the Tuggeranong area, understanding the full cost structure of fixed rate investment loans is crucial for your property investment strategy. Fixed interest rate loans provide certainty in your investment loan repayments, but they come with specific fees and costs that can impact your rental yield and overall returns.
Understanding Fixed Rate Investment Loan Structure
A fixed interest rate investment loan locks in your interest rate for a predetermined period, typically one to five years. This means your calculating investment loan repayments remains consistent throughout the fixed period, making it easier to budget for your investment property portfolio. Unlike variable interest rate loans, fixed rate options protect you from interest rate increases but also mean you won't benefit from rate decreases.
Key Fees Associated with Investment Loan Applications
The application process for investment loans involves several fees that vary between lenders:
• Application fees: Range from $0 to $800 depending on the lender
• Valuation fees: Typically $300 to $600 for property valuation
• Settlement fees: Usually $150 to $300 for loan settlement
• Legal fees: May apply for documentation review
• Mortgage registration fees: State-based charges for registering the mortgage
When you access investment loan options from banks and lenders across Australia through True North Mortgage Solutions, we help identify which lenders offer fee waivers or reductions for investment property loans.
Lenders Mortgage Insurance (LMI) Considerations
Lenders mortgage insurance (LMI) becomes applicable when your loan to value ratio (LVR) exceeds 80% of the property value. For investment properties, LMI costs are generally higher than owner-occupied properties. The cost depends on:
• Your loan amount relative to property value
• Whether you're purchasing a town house, apartment, or stand alone dwelling
• Your overall borrowing capacity
• The specific LMI provider used by your lender
LMI premiums can range from $2,000 to $20,000 or more, depending on these factors.
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Ongoing Costs During the Fixed Rate Period
Beyond initial fees, fixed rate investment loans include ongoing costs:
• Monthly loan repayments: Principal and interest or interest-only options
• Annual package fees: Some lenders charge $200-$400 annually
• Account keeping fees: Monthly charges ranging from $8 to $15
• Property management fees: If using a rental agent (typically 6-8% of rental income)
For your first investment property or expanding your investment property portfolio, these ongoing costs significantly impact your negative gearing benefits and overall property investment returns.
Additional Property Investment Costs
When buying a rental property, consider these additional expenses:
• Stamp duty: Varies by state and property value, with investor rates typically higher
• Building and pest inspections: $400 to $800 for thorough property assessment
• Conveyancing fees: Legal costs for property transfer
• Property insurance: Landlord insurance and building insurance
• Council rates and strata fees: Ongoing property ownership costs
Fixed Rate vs Variable Rate Cost Comparison
Fixed rate loans often carry slightly higher interest rates than variable options initially. However, they provide cost certainty, which is valuable when:
• Interest rates are expected to rise
• You prefer predictable repayment amounts for budgeting
• Your investment property strategy relies on stable cash flow projections
Investment Loan Interest Rate Discounts
Many lenders offer interest rate discounts for investment loans based on:
• Professional occupation status
• Existing banking relationships
• Loan size and LVR
• Overall financial position and bank statements verification
Through our streamlined application process, we identify which lenders provide the most suitable investment loan features for your situation, including available discounts.
Maximising Your Investment Returns
To optimise your investment loan costs:
- Research property thoroughly to ensure strong rental yield potential
- Compare multiple lenders rather than accepting the first offer
- Consider the total cost of ownership, not just the interest rate
- Structure your loan to maximise negative gearing benefits
- Review periodically to ensure your loan remains competitive
The property market in Tuggeranong offers various opportunities for invest in real estate, from established homes to modern apartments. Understanding all associated costs helps you make informed decisions about your investment property loan structure.
Our team at True North Mortgage Solutions specialises in investment loan options and can guide you through the entire investment loan application process. We work with numerous lenders to find suitable fixed rate options that align with your property investment goals and financial circumstances.
Don't let complex fee structures deter you from building your investment property portfolio. Call one of our team or book an appointment at a time that works for you to discuss your investment loan requirements.