Top tips to lock in fixed rates on investment loans

Fixed rates on investment loans give you certainty when rental income matters

Fixed rate features on an investment loan lock your interest cost for a set period, usually between one and five years. That certainty helps you plan cash flow when rental income needs to cover or contribute to loan repayments, and it removes the risk of rate rises eating into your returns during the fixed term.

Lenders generally price fixed rates on investment loans higher than fixed rates for owner-occupiers because investment lending carries additional risk under APRA's capital framework. The difference in pricing can be around 0.10 to 0.30 percentage points depending on the lender and your loan structure. Understanding how fixed rate features work on investment loans helps you decide whether the trade-off between certainty and flexibility suits your borrowing and property goals.

How fixed rate investment loans are priced

Investment loans attract higher risk weights under the prudential standards, which means lenders need to hold more capital against them. That flows through to the interest rate. Fixed rates on investment loans are usually higher than variable rates at the time you lock in, reflecting the lender's cost of funding and the added capital requirement.

Consider an investor refinancing a property in Chermside with a loan amount of $450,000 and a rental yield of 4.8 per cent. At current variable rates, monthly repayments on an interest-only loan might sit around $2,100. Fixing that rate for three years at a slightly higher rate adds around $50 to $80 per month but removes exposure to any upward rate movement during that period. Rental income of $1,800 per month leaves a monthly shortfall, but the fixed repayment amount lets the investor budget confidently and claim the full interest deduction without worrying about surprise increases.

Interest-only periods and fixed rates can overlap

Many investment loans include an interest-only period, typically up to five years, which reduces your repayments while the property is tenanted. You can fix the rate during that interest-only period, which gives you predictable repayments and defers principal repayments until after the fixed term or interest-only period ends.

Locking in a fixed rate during an interest-only period works well when you want low repayments now and plan to sell, refinance or switch to principal and interest repayments before the fixed term expires. Once the interest-only period ends, the loan reverts to principal and interest, which lifts your repayment amount regardless of whether the rate is still fixed. That increase can be significant, so mapping out the timing of both features before you commit is important.

What happens if you need to break a fixed rate early

Break costs apply if you repay, refinance or increase your loan amount during a fixed rate period. The lender calculates the break cost based on the difference between your fixed rate and the wholesale rate the lender can now earn by reinvesting your repayment. If rates have fallen since you fixed, the break cost can run into thousands of dollars. If rates have risen, there may be no break cost at all.

In our experience, investors who fix their rate and then decide to access equity for a second purchase or renovation often face an unexpected bill. A break cost on a $400,000 loan with three years remaining on a fixed term can exceed $10,000 if rates have dropped by just one percentage point. Some lenders offer portability, which lets you transfer your fixed rate to a new property without penalty, but that feature is rare and usually comes with conditions. Knowing your plans before fixing is more useful than hoping for a workaround later.

Split rate structures give you access and stability

A split rate loan divides your borrowing between fixed and variable portions, often 50/50 or 60/40 depending on your preference. The fixed portion gives you repayment certainty, while the variable portion lets you make extra repayments, access an offset account or redraw without triggering break costs.

For investors building a portfolio, the variable portion can also be increased later without disturbing the fixed portion, which preserves your locked rate and avoids penalties. This approach suits investors who want the confidence of a fixed rate on the majority of their borrowing but expect to release equity or adjust their loan structure as their portfolio grows. The trade-off is slightly more complex loan administration, and you will usually pay two separate annual fees if the lender charges a loan account fee for each split.

Fixed rate features and negative gearing under the new rules

From the 2027-28 income year, interest on established investment properties acquired after 12 May 2026 can only be deducted against income from residential properties, not salary or wages. Properties held before that date, or eligible new builds purchased after that date, continue to allow full deductibility. That distinction affects how useful a fixed rate is for managing tax deductions.

If you are purchasing an established property in Brisbane after 12 May 2026 and expect a rental shortfall, fixing your rate provides repayment certainty but does not increase your ability to offset that shortfall against other income. You can still carry forward the loss to offset future property income or capital gains on residential property. If you are purchasing an eligible new build, fixing the rate locks in a known interest expense that remains fully deductible, which can make budgeting more predictable during the early years of ownership when rental income may not cover costs.

Refinancing a fixed rate investment loan

Refinancing during a fixed rate period almost always triggers break costs unless your existing lender waives them as part of a retention offer. Refinancing after the fixed period ends is straightforward and lets you access lower rates or better loan features from another lender without penalty.

Investors in suburbs like Bulimba, where property values have risen, often refinance after a fixed period to access equity for their next purchase. Timing your refinance to coincide with the end of your fixed term, rather than partway through, avoids unnecessary costs and gives you the full benefit of any rate improvement or product changes available at that time. Some lenders also offer fixed rate honeymoon periods with discounted rates for the first year or two, which can reduce your borrowing costs if you plan to hold the loan for a longer period.

Should you fix your investment loan rate in Brisbane now

Deciding whether to fix depends on your view of future rate movements, your need for repayment certainty and how long you plan to hold the loan without major changes. Fixed rates currently sit above variable rates for most lenders, so fixing today costs more in the short term but protects you if rates rise further. If you expect to sell, renovate or access equity within the next two years, a variable rate or split rate loan gives you more flexibility without the risk of break costs.

For investors holding properties near high-demand precincts such as the northern suburbs or along the Brisbane River corridor, rental demand remains consistent, which supports stable income. Locking in a fixed rate makes sense if that income is already tight against your repayments and you want to remove the risk of a rate rise pushing the property into deeper negative territory. If your rental income comfortably covers your repayments and you have other liquid assets to manage rate increases, a variable rate loan with an offset account often delivers lower costs and more control.

We work with investors across Brisbane who are weighing up fixed and variable options on their investment loans. Call one of our team or book an appointment at a time that works for you.

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