Why Should Engineers Consider a Fixed Rate Investment Loan?

A fixed rate investment loan gives you one thing: repayments that do not change for the fixed term. If you like systems that behave predictably, that can suit you. It also costs you flexibility, and that trade-off is what this article covers.

What Is a Fixed Rate Investment Loan?

A fixed rate investment loan sets your interest rate at an agreed level for a set period, so your repayments stay the same during that term. When the term ends, the loan moves to a new rate unless you choose another option.

The main alternative is a variable rate, which the lender can move up or down. Some investors split the loan, with one part fixed and one part variable. A split gives you some certainty and some room to move. Whether a fixed or split portion allows extra repayments or an offset account depends on the lender, so check this before you commit.

Why Fixed Repayments Suit Engineers Who Plan Ahead

A fixed rate suits investors who want a known repayment figure in their budget for the term. That helps if you are modelling cash flow against rent, a mortgage on your home and variable income such as bonuses or RSUs.

It is a bit like capacity planning. You remove one variable so the rest of the model is easier to read. The trade-off is that if rates fall, you stay on your higher fixed rate. You may also face a break cost if you repay or refinance the loan early, and lenders calculate that cost in different ways.

Fixed Rate Investment Loan Repayments: A Worked Example

To see the numbers, take an investor who borrows $500,000 over 30 years on a fixed rate of 6.75% p.a. This rate is illustrative only and is not a current market rate.

On principal and interest, the monthly repayment is about $3,243. If the same loan were on a variable rate that rose by one percentage point to 7.75%, the repayment would be about $3,582. That is roughly $339 a month more.

In this scenario, the fixed rate protects the investor from that rise for the fixed period (say three years), and the repayment stays at $3,243 during it. When the fixed term ends, the repayment will change unless the investor re-fixes. The cost is that if the variable rate had dropped instead, the investor would have missed out and might face a break cost to exit. For the investor who values certainty over potential savings, that is a reasonable trade. For one who expects to sell or refinance within the term, it may not be.

You can test your own figures with a repayment calculator, or ask us to run them for your situation.

Can You Pair a Fixed Rate With Interest Only?

Yes, many lenders offer interest-only repayments during a fixed term, but lenders assess you on the full repayment, not the lower one. The interest-only feature does not increase how much you can borrow.

Using the same illustrative 6.75% rate, interest-only repayments on $500,000 would be about $2,813 a month. The balance does not fall, though. If the loan was 30 years with a five-year interest-only period, repayments would then be assessed and charged on principal and interest over the remaining 25 years, which is about $3,455 a month at the same rate. Our page on interest only loans for tech industry workers explains the structure in more detail.

How Much Can You Borrow for an Investment Property?

Your borrowing power depends on your income, your debts and how the lender assesses the loan. Banks must test new borrowers at a rate at least 3.0 percentage points above the loan's actual rate, so a fixed rate does not let you borrow more than the loan would otherwise allow.

Lenders usually count only part of your expected rent. APRA's guidance is that prudent lenders include no more than 80% of expected rent, which allows for vacancy periods. Individual lenders set their own rules on what rental evidence they accept. Our borrowing capacity page shows what shapes your number, and the investment loans for tech industry workers page covers lender options for people in your field.

What Happens When Your Fixed Term Ends?

When a fixed term ends, your loan usually moves to a different rate unless you arrange something else. Check how the reversion rate compares with other lenders' current rates, and plan ahead.

Your choices generally include re-fixing, moving to a variable rate, splitting the loan, or refinancing to another lender. Set a reminder well before the expiry date and review your options early. Our guides on fixed rate expiry and investment loan refinancing cover each path.

Does a Fixed Rate Change the Tax Side of Investing?

A fixed rate does not change which costs are deductible. Interest on money borrowed to buy a rental property is generally deductible while the property is rented or available for rent, and only the interest part of a principal and interest repayment counts, not the principal.

Tax rules for negative gearing are changing. Losses on established residential properties bought after 7:30pm AEST on 12 May 2026 can, from the 2027-28 income year, only be used against other residential property income, including residential capital gains. Properties you held at that time, and eligible new builds, are treated differently. These rules are detailed and your situation will differ, so speak with your accountant before you decide.

Is Your First Investment Purchase Ready for a Fixed Rate?

A fixed rate makes most sense once you know how long you plan to hold the loan. If you are still working out your goals, our guide to buying your first investment property is a good starting point.

Before you choose, decide how likely you are to sell, refinance or make extra repayments during the term. If that chance is high, a variable rate or a split loan may fit better. If you want a stable cost while you focus on your career, fixing part of the loan may suit.

Call one of our team or book an appointment at a time that works for you, and we will compare fixed, variable and split options from lenders across Australia against your plans.

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