Do you know what fees hide in investment variable loans?

Most investors spend hours comparing rates but overlook the fee schedule that quietly compounds every month.

Variable rate investment loans come with a handful of recurring costs that aren't always front and centre during settlement. Some are justified, some are inherited from legacy pricing, and a few exist purely because you haven't asked to remove them. For McCrae investors holding coastal property or multi-asset portfolios, those small monthly charges add up to real money over a decade.

What fees appear on most variable investment loans

You'll typically pay an annual package fee, a monthly account-keeping fee, or both. The annual package fee usually sits between $200 and $400 and often unlocks a rate discount or access to offset features. The monthly account-keeping fee ranges from $10 to $15 and covers administration. Some lenders bundle both into a single structure, others separate them completely.

Lenders may also charge a settlement fee at the start, a discharge fee when you refinance or sell, and a valuation fee if you request a formal property appraisal mid-term. Offset accounts on investment loans sometimes attract their own monthly fee, typically $5 to $10, depending on the lender's product tier.

Are package fees worth paying on an investment loan

They are if the rate discount exceeds the annual cost. Consider an investor holding a variable loan of $650,000 at current variable rates. A package fee of $395 might deliver a 0.30 percentage point discount. Over twelve months, that discount saves roughly $1,950 in interest, turning the fee into a net gain of around $1,555.

If the discount is only 0.10 percentage points, the saving drops to $650, and the package fee becomes marginal. Some lenders waive the package fee entirely if your total borrowing exceeds a threshold, often $150,000 or $250,000 depending on the institution. Others embed the discount into the advertised rate and charge no separate fee at all.

The calculation changes when you refinance. If you move lenders every two or three years to chase better pricing, you pay the package fee without capturing the full multi-year benefit, and discharge fees on exit can add another $300 to $500.

Monthly account fees that serve no function

Account-keeping fees made sense when statements were printed and mailed. Now they mostly subsidise legacy systems. Some lenders still charge $10 or $15 per month even when your loan is fully digital and requires no manual intervention.

If you're paying a monthly fee on top of an annual package fee, ask whether both are necessary. In our experience, around half of established borrowers carry fees that could be removed or waived through a product switch within the same lender. That's $120 to $180 per year that could be redirected into offset or additional repayments.

A few lenders offer fee-free variable products with slightly higher rates. The crossover point depends on your loan amount. On balances below $300,000, a no-fee product at 0.05 percentage points higher might still cost less annually than a discounted loan with $395 in fees.

Discharge and settlement costs when you move or sell

Discharge fees range from $150 to $500 depending on the lender. Settlement fees on a new investment loan refinance typically sit between $200 and $600. If you're refinancing to access equity or secure a lower rate, these costs should be factored into your breakeven timeline.

Valuation fees are either paid upfront or capitalised into the new loan. For a standard residential property in McCrae, expect $200 to $400 for a desktop valuation and $600 to $900 for a full kerbside or internal inspection, depending on complexity and access.

If you're refinancing to release equity to fund a second purchase, the settlement and valuation costs on the existing loan are usually deductible against your investment income in the year incurred, provided the refinance relates to the income-producing asset.

How offset account fees affect your net return

Offset accounts on investment loans reduce your taxable interest without changing your deduction. If you hold $40,000 in offset against a $500,000 investment loan, you're charged interest on $460,000, and that reduced interest amount is what you claim.

Some lenders charge $10 per month for offset functionality. Over ten years, that's $1,200. Others include it within the package fee or offer it at no additional cost. If your offset balance is consistently low, the fee might outweigh the benefit. An investor keeping $5,000 in offset saves roughly $200 per year in interest at current variable rates. A $120 annual offset fee reduces that net saving to $80.

If you're holding surplus cash temporarily between tenant payments or body corporate levies, offset makes sense. If the account sits empty most of the year, it's dead weight.

What McCrae investors should ask their current lender

McCrae's coastal property market attracts a mix of local upgraders and Melbourne-based investors holding holiday rentals or long-term tenancies near the foreshore and golf course precinct. Vacancy rates fluctuate seasonally, and rental income can dip during winter months, making fee efficiency more important when cashflow tightens.

If you haven't reviewed your loan structure in two years, request a current fee schedule and rate confirmation in writing. Ask whether your package fee can be waived based on your borrowing history or total facility size. Ask whether switching to a no-frills variable product within the same lender would reduce your all-in cost. Most lenders will negotiate retention pricing if you signal intent to refinance elsewhere.

If your loan predates the introduction of offset or redraw features, ask whether a product switch unlocks those tools without triggering a full refinance. Internal switches are usually faster and cheaper than moving lenders, though they won't always deliver the sharpest rate.

When refinancing makes more sense than fee negotiation

If your current lender won't move on rate or fees, and you're paying more than 0.20 percentage points above current market pricing for a comparable variable investment loan, refinancing is worth modelling. The cost to refinance typically includes discharge, settlement, valuation and sometimes legal fees, totalling $1,500 to $2,500 depending on your state and lender.

On a $600,000 loan, a 0.30 percentage point improvement saves around $1,800 per year. You recover refinancing costs in twelve to eighteen months and gain ongoing savings after that. If you're also consolidating other debt or accessing equity for a second purchase, the refinance can serve multiple goals in one transaction.

Some lenders offer cashback incentives between $2,000 and $4,000 to cover your switch costs, though these are often tied to minimum loan amounts and clawback clauses if you exit early. Read the fine print before committing.

Call one of our team or book an appointment at a time that works for you.

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