Comparing Investment Loan Packages: What to Prioritise Beyond the Headline Rate

Understanding loan features that matter: redraw, portability, LVR tiers, and more

More Than Just the Rate

When property investors compare home loans, the first number they usually check is the interest rate—and that’s perfectly reasonable. A lower rate generally means lower repayments and better cash flow. But for seasoned investors, the headline rate is just the start of the conversation.

Investment loans come with a wide range of features, structures, and conditions that can either support—or quietly undermine—your strategy. Knowing what to prioritise beyond the rate is essential if you want to build a sustainable, growth-focused portfolio. In this guide, we’ll walk through the most important features investors should assess when comparing investment loan packages and explain how each one can affect your long-term outcomes.

Why Investors Must Look Beyond Interest Rates

Yes, the interest rate matters—but it’s not the full story. A seemingly cheap loan can end up costing you far more in lost flexibility, higher taxes, or excessive fees over time.

Your loan structure needs to fit your investment strategy. Are you planning to buy and hold? Refinance regularly? Tap into equity for future purchases? Renovate and flip? Your finance should be set up to help you execute these plans smoothly. That means understanding features like redraw facilities, offset accounts, LVR tiers, repayment types, and more.

It’s this attention to detail that separates strategic investors from those who are only chasing a low number on paper.

1. Redraw Facilities: Accessing Surplus with Caution

A redraw facility allows you to access extra repayments you’ve made beyond the minimum. This can be handy if you need funds for repairs, emergencies, or even another deposit.

Key points to know:

• Some lenders restrict access or require minimum redraw amounts.
• Redraws are often unavailable on fixed-rate loans.
• Funds may take longer to access compared to an offset account.

Redraw works best when you’re regularly making extra repayments and want optional access later—but it’s not a transactional tool like an offset account.

2. Offset Accounts: Optimising Cash Flow Flexibility

A 100% offset account is one of the most valuable tools for investors. It allows you to park surplus funds in an account linked to your loan, reducing interest charges without locking up the money.

Advantages:

• Improves tax efficiency compared to paying down principal.
• Keeps funds liquid for future opportunities.
• Lets you consolidate rent, wages, and savings.

Make sure the account is a true 100% offset (not partial) and check if your lender offers multiple offsets if you’re managing several loans.

3. Portability: Keeping Your Loan When You Move

Loan portability allows you to transfer your existing loan to a new property without closing and reopening the loan. For active investors, this can save considerable time and costs.

Why it matters:

• Avoids new application, valuation, and legal fees.
• Maintains access to your current interest rate or package benefits.
• Speeds up the settlement process.

Some lenders have restrictions, like requiring the sale and purchase to settle on the same day, so check the fine print.

4. Loan-to-Value Ratio (LVR) Tiers and Their Hidden Costs

Your LVR—the size of your loan compared to the property value—affects your rate and conditions.

Typical tiers:

• Up to 60% LVR: best rates
• Up to 80% LVR: competitive rates, no LMI
• 80–90% LVR: higher rates, lenders mortgage insurance (LMI) required
• 90–95% LVR: highest rates, limited lender options

LMI can cost tens of thousands of dollars and only protects the lender, not you. Sometimes keeping your LVR just below 80% can save far more than stretching to a bigger loan.

5. Fixed, Variable, or Split: Choosing the Right Structure

The choice between fixed, variable, or split loans depends on your goals and risk appetite.

Fixed rate pros:

• Predictable repayments.
• Protection from rising rates.
• Easier budgeting.

Fixed rate cons:

• Usually no redraw or offset.
• Potentially high break fees if you refinance early.

Variable rate pros:

• Flexibility for refinancing or accessing equity.
• Often includes offset and redraw.

Split loans combine both, offering stability on one portion and flexibility on another—ideal for investors balancing risk and growth.

6. Loan Terms, Repayment Types, and Flexibility

Beyond structure, your loan term and repayment type significantly impact cash flow and equity build-up.

Loan terms:

• Standard is 30 years, but some lenders offer 35–40 years.
• Longer terms reduce monthly repayments and boost borrowing power, especially early on.

Repayment types:

• Interest-only repayments are popular during acquisition or renovation phases to maximise cash flow.
• Principal and interest (P&I) repayments build equity faster, improving your borrowing profile over time.

Note: many lenders assess serviceability based on P&I, even if you apply for interest-only.

7. Fees and Charges: What to Watch Out For

Headline rates often hide a long list of fees:

• Application and valuation fees.
• Legal, settlement, and discharge fees.
• Annual package fees.
• Break costs (on fixed loans).

For investors with multiple properties, even small annual fees can stack up quickly. Always calculate the true loan cost over three to five years, not just the first year’s savings.

8. Lender Policy Differences: Serviceability and Risk Appetite

Two lenders might offer identical rates, but one could approve your loan while the other rejects it.

Key policy differences:

• Rental income treatment (some lenders only count 70–80% of rent).
• Negative gearing treatment.
• Minimum cash or buffer requirements.
• Maximum property limits.
• Self-employed income assessment.

For multi-property investors or those with complex income, lender choice is often more important than rate.

How to Compare Packages Effectively

To compare investment loans the right way:

• Calculate the total cost: Include fees, rates, and features over several years.
• Check strategic fit: Look for offset, redraw, portability, or split options.
• Stress-test cash flow: Model your numbers with rates 1–2% higher.
• Assess flexibility: Can you refinance or restructure easily?
• Ask smart questions: Does the lender support investors? Do they allow portfolio growth?

Working with a specialist broker can be a huge advantage here, especially one familiar with portfolio lending.

Tailoring the Right Loan for Your Investment Strategy

Investment success isn’t just about picking the right property—it’s about building a finance structure that supports your strategy. Two investors with the same property can end up with very different outcomes depending on how they fund it.

As your portfolio grows, the importance of flexibility, liquidity, and smart structuring increases. Review your loans regularly, and work with professionals who understand investment finance.

Because ultimately, the best loan isn’t the one with the lowest rate—it’s the one that helps you build wealth, adapt to market cycles, and stay in the game for the long term.