How to Choose Fixed Rate Terms on an Investment Loan

A fixed rate locks your investment loan repayments for a set period, and the trade-off is less flexibility if your plans change.

As a qualified paramedic, your income is steady, but your shifts, overtime and leave can move around. That makes repayment certainty appealing. It also makes flexibility worth protecting. This article helps you decide how much of your investment loan to fix, and for how long.

What Is a Fixed Rate Investment Loan?

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

Fixed terms are set by each lender, so the options you see depend on who you borrow from. A broker can compare investment loans for paramedics across lenders and show you which fixed terms are on offer.

The rate you are offered depends on your deposit size, your lender and your loan structure.

How Do Fixed Rate Terms Affect Your Repayments?

Your repayments on a fixed loan stay the same for the whole fixed term, which makes your holding costs simpler to plan around. They do not change if the market moves, up or down.

If you choose interest only for the fixed period, you pay only the interest. If you choose principal and interest, you also pay down the loan. Here is an illustrative example at 6.75% p.a. on a $600,000 loan over 30 years.

• Interest only: $600,000 x 6.75% = $40,500 a year, or $3,375 a month.
• Principal and interest over 30 years: about $3,892 a month.

The interest-only repayment is lower, but the loan balance does not fall. Once the interest-only period ends, repayments are worked out over the shorter remaining term, so they rise. On a 30-year loan with a 5-year interest-only period, that is 25 years. Over 25 years at the same illustrative rate, repayments would be about $4,145 a month. Use a borrowing capacity calculator to test your own numbers.

Lenders also assess interest-only loans on the shorter principal and interest term, so an interest-only feature does not lift how much you can borrow. See interest only loans for paramedics for how this works.

What Are the Risks of Fixing Your Investment Loan Rate?

The main risks are break costs, limited extra repayments and missing out if rates fall. These vary by lender, so check the terms before you sign.

If you sell, refinance or repay the loan early during the fixed term, a lender may charge a break cost. The method and amount are set by the lender, so ask for the calculation in writing. Many fixed loans also limit extra repayments, and some do not offer an offset account on the fixed portion. Confirm this first if you plan to park savings against the loan.

If your rate is fixed and variable rates drop, you stay on the higher rate. If rates rise, you are protected. Nobody can call that in advance, so it is a question of how much certainty you want.

How Does a Split Loan Work for Investors?

A split loan divides your investment loan into a fixed portion and a variable portion, so you get some repayment certainty and some flexibility. The right split depends on your cash flow and your plans for the property.

Consider a paramedic who borrows $600,000 for an investment property. They fix $360,000, which is 60%, so most of their repayments are locked in. They leave $240,000 variable so they can use overtime pay to make extra repayments without penalty, subject to the lender's terms. Their fixed portion is $360,000 at the illustrative 6.75% p.a., which is $24,300 a year in interest if held as interest only, or $2,025 a month.

The outcome is a repayment they can budget around, plus a variable portion they can reduce faster. If they decide to sell during the fixed term, break costs would apply to the fixed portion only. That is the trade-off for the certainty.

Make sure you ask whether the lender allows transfers between portions and whether an offset is available on each one.

How Does Tax Fit In With Your Fixed Rate Decision?

Interest on a loan used to buy a rental property is generally deductible while the property is rented or available for rent, but only the interest part of your repayment counts. The principal part is not deductible.

This applies whether the loan is fixed or variable. Fixing your rate does not change what is deductible, only the amount of interest you pay. Offset accounts reduce the interest charged, so they also reduce the interest you can claim.

Negative gearing rules have changed. Losses on residential properties held at 7:30pm AEST on 12 May 2026 stay deductible against other income, as do losses on eligible new builds. For established residential properties bought after that time, net rental losses will be deductible only against residential property income from the 2027-28 income year. This affects how a rental loss can be used, so speak with your accountant before you choose your loan structure. Nothing here is a certain tax outcome.

When Should You Refinance Instead of Waiting for the Fixed Term to End?

Refinancing during a fixed term can trigger break costs, so it usually pays to check the numbers first. Waiting until the term ends often avoids that cost.

To see when your term finishes and what your options are, use the fixed rate expiry calculator. If your term is ending, investment loan refinancing for paramedics lets you compare your current loan against other lenders before you roll onto a revert rate.

Before you commit to any new fixed term, think about your next purchase. If you plan on expanding your property portfolio, a loan with tight conditions can limit how you use equity later.

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