Why Choose Fixed Rate Investment Loans?
When buying an investment property, selecting the right financing structure can significantly impact your property investment strategy. Fixed interest rate investment loans offer stability and predictability that many property investors in Oakleigh find valuable for their investment property portfolio.
Unlike variable interest rate loans, fixed rate investment loans lock in your interest rate for a predetermined period, typically ranging from one to five years. This structure allows you to calculate investment loan repayments with confidence, making budgeting and cash flow planning more reliable for your rental property loan.
Key Benefits of Fixed Rate Investment Loans
Fixed rate terms provide several advantages for investors looking to invest in real estate:
• Predictable repayments: Your loan amount repayments remain consistent throughout the fixed period
• Protection from rate rises: If interest rates increase, your repayments stay the same
• Budgeting certainty: Easier to plan rental yield calculations and negative gearing benefits
• Peace of mind: No surprises with fluctuating monthly payments
When research property investments, particularly for your first investment property, this predictability can be invaluable for financial planning.
Understanding Fixed Rate Periods and Options
Most lenders offer fixed rate periods of:
- One year terms: Shortest commitment with quickest access to rate changes
- Two to three year terms: Popular choice balancing security and flexibility
- Five year terms: Maximum security against rate movements
The application process for fixed rate investment loans follows similar steps to variable loans, requiring bank statements, income verification, and property valuations. However, lenders may offer different interest rate discounts depending on your chosen fixed term.
Loan to Value Ratio Considerations
Your loan to value ratio (LVR) significantly impacts your investment loan options and interest rate. Most lenders require:
• 80% LVR or below: Avoid lenders mortgage insurance (LMI)
• 80-90% LVR: LMI required but still competitive rates available
• Above 90% LVR: Limited options, higher costs
When buying a rental property, whether it's an apartment, town house, or stand alone dwelling, your LVR affects both your borrowing capacity and the terms available through our streamlined application process.
Investment Property Types and Fixed Rate Suitability
Fixed rate investment loans work across all property types:
Apartments: Often popular with first-time investors due to lower entry costs and stamp duty
Town houses: Balanced option offering land component and moderate maintenance
Stand alone dwellings: Typically offer stronger capital growth potential and rental yields
Each property type presents different investment loan application considerations, and fixed rates can provide stability regardless of your chosen investment approach.
Comparing Fixed vs Variable for Investment Loans
When applying for an investment loan, consider these key differences:
Fixed Rate Advantages:
• Certainty in repayments
• Protection from rate rises
• Easier portfolio planning
Potential Limitations:
• May miss out if rates fall
• Less flexibility in loan features
• Break costs if you need to exit early
Your property investment strategy should align with your risk tolerance and investment timeline. Blue Lion Lending can access investment loan options from banks and lenders across Australia, ensuring you receive suitable fixed rate terms for your circumstances.
Getting Started with Your Investment Loan Application
The investment loan application process typically involves:
- Assessment of borrowing capacity
- Property research and selection
- Loan structure decisions (fixed vs variable)
- Documentation gathering
- Formal application submission
- Property valuation and settlement
As experienced mortgage brokers in Oakleigh, we understand the local property market dynamics and can guide you through each step of your investment journey.
Fixed rate investment loans offer valuable stability for property investors seeking predictable returns and manageable cash flow. Whether you're purchasing your first investment property or expanding an existing portfolio, understanding how fixed rate terms work within your broader investment strategy is crucial for long-term success.
Call one of our team or book an appointment at a time that works for you to discuss your investment loan options and determine if fixed rate terms align with your property investment goals.