Top tips to choose a variable rate investment loan

Variable rates let you adjust repayments as your income changes

A variable rate investment loan adjusts when the lender changes their rate. That means your repayment can go up or down without needing to refinance or pay a break cost. For investors in Baldivis who receive rental income alongside salary, or who plan to direct bonuses or tax refunds toward the loan, this flexibility becomes important when you want to reduce debt faster.

Consider an investor who purchases a unit in one of the newer estates near Baldivis Boulevard. Rental income covers most of the repayment, and they plan to add extra payments when work picks up in their seasonal trade. A variable rate loan allows those extra repayments without penalty, and most products let you redraw if cash flow tightens. The loan adjusts to their income pattern rather than locking them into a fixed schedule.

Offset accounts reduce the interest you pay on the full loan amount

Most variable rate investment loans include an offset account. Every dollar you hold in the offset reduces the balance on which interest is calculated, even though the loan amount stays the same. That cuts your interest cost without changing the deductibility of the loan for tax purposes.

In a scenario where an investor holds $20,000 in an offset account against their loan, interest is only charged on the loan amount minus that $20,000. The rental income and any surplus salary can sit in the offset between repayments, reducing interest daily. Because the funds remain accessible, you keep liquidity for repairs, rate rises or vacancy periods without needing to apply for a redraw or wait for approval.

Interest-only periods keep repayments lower while you build equity elsewhere

Many variable rate products allow an initial interest-only period, typically between one and five years. During that time, you pay only the interest portion of the loan, which lowers the monthly repayment and can help with cash flow if you are holding multiple properties or directing income toward another goal.

For a Baldivis investor with a property near the train station precinct, an interest-only structure might suit the first few years while they save a deposit for a second property. The rental income covers the interest repayment, and they avoid tying up surplus funds in principal reduction until their portfolio grows. Once the interest-only term ends, the loan converts to principal and interest, or they can refinance if their circumstances or strategy have changed.

Rate discounts depend on your loan size and how much equity you hold

Lenders apply different interest rate discounts depending on the loan amount, the loan-to-value ratio and whether you are borrowing for one property or a portfolio. A lower LVR usually attracts a better discount because the lender's risk is reduced. Investors who hold equity in other property or who are borrowing a larger amount often receive more competitive pricing.

When refinancing an investment loan, your current equity position matters as much as the rate itself. If your Baldivis property has increased in value since purchase and your loan balance has reduced, you may now sit below 80 per cent LVR and qualify for a better rate without needing Lenders Mortgage Insurance on any top-up. Lenders will reassess your borrowing capacity based on rental income, other property holdings and your current debt position.

Tax treatment depends on whether you hold the property before or after May 2026

From the 2027-28 income year, the way losses on investment properties are treated for tax purposes changes. Properties held at 12 May 2026, including those under contract at that time, remain fully deductible against all income. Properties purchased after that date can only offset their losses against income from other residential property unless the property qualifies as an eligible new build.

This does not change the deductibility of interest itself. Interest on your variable rate investment loan remains deductible as long as the property is rented or genuinely available for rent. What changes is where you can apply any net loss after all deductible costs are taken into account. If you are looking at an established property in Baldivis and you already hold another investment property, you will be able to offset any loss against income from that other property, or carry the loss forward to use in future years.

Loan features matter more than the rate alone when your strategy spans multiple properties

A low rate on a variable product means little if the loan does not include the features that let you execute your strategy. Offset accounts, unlimited extra repayments, portability and the ability to split the loan across multiple securities all contribute to how well the loan supports portfolio growth.

Investors building a portfolio in the southern suburbs often need a loan structure that allows them to hold multiple properties under one facility or to move the loan to a new security without reapplying. Some variable rate products allow you to port the loan to a new property when you sell, preserving your current rate and any discounts. Others let you add new properties to the same loan account as your equity grows, reducing the need for separate applications and keeping your structure consolidated.

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

Variable rate investment loans offer flexibility, but choosing the right product depends on your current position and where you plan to take your portfolio. We work with property investors across Baldivis and the surrounding areas to structure loans that support long-term goals without locking you into arrangements that no longer fit. Call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions