Why Variable Rate Investment Loans Matter for Concreters

Variable rate investment loans move with the market. When lenders change their rates, your repayment changes too.

Concreters working on commercial slabs or residential driveways often carry equipment debt, ute finance, and fluctuating income between contracts. A variable rate investment loan lets you make extra repayments without penalty, pull money back through an offset account when work slows down, and refinance without break costs if a better deal comes up. The trade-off is that your rate can rise when the Reserve Bank or your lender decides to move it, and you wear that increase in full.

How Variable Investment Loan Rates Are Set

Your rate is set by the lender, not by the Reserve Bank directly. Lenders use a base rate and then add a margin depending on your loan size, deposit, and whether the property is owner-occupied or investment. Investment loans attract a higher margin than owner-occupied loans because lenders face higher capital requirements under APRA's risk weighting framework. A variable rate investor loan typically sits 0.3 to 0.6 percentage points above the equivalent owner-occupied rate at the same lender.

Some lenders discount their headline rate for larger loans or lower loan-to-value ratios. If you borrow above a certain threshold or keep your LVR below 80 per cent, you might qualify for a rate discount. Those discounts are not locked in and can be reduced or removed if the lender changes their pricing policy.

Offset Accounts and Why They Work for Concreters

An offset account is a transaction account linked to your investment loan. Every dollar in the offset reduces the balance on which interest is calculated. If you have a loan balance of $400,000 and $30,000 in your offset account, you only pay interest on $370,000.

Concreters often invoice at the end of a job and wait weeks for payment. When that payment hits, you can park it in the offset account until you need to pay suppliers, subcontractors, or GST. The money reduces your interest cost while it sits there, and you can access it anytime without reapplying for credit. That flexibility is worth more than a slightly lower rate without an offset.

Most variable rate investment loans come with an offset account. Fixed rate investment loans rarely do.

Interest-Only Repayments and Cash Flow Management

Interest-only repayments mean you pay only the interest portion each month, not the principal. The loan balance stays the same, and your monthly repayment is lower. Lenders typically allow interest-only periods of one to five years on investment loans, after which the loan reverts to principal and interest unless you apply to extend.

Consider a concreter who buys a rental property and borrows $450,000 at a variable rate. On interest-only repayments, the monthly cost might sit around $2,100 depending on the rate. On principal and interest, it could be closer to $2,700. That $600 difference each month can cover a ute payment, tool finance, or a buffer for weeks when weather shuts down a pour.

Interest-only repayments do not reduce your loan balance, so you are not building equity through repayments. You rely on the property increasing in value or on making lump sum payments when cash flow allows. From a tax perspective, interest on an investment loan is deductible as long as the property is rented or genuinely available for rent, so keeping the loan balance higher and the interest cost higher can increase your annual deduction. That benefit disappears if you are not earning rental income or if the property sits vacant without being advertised.

Under the new rules that started in the 2027-28 income year, rental losses on established properties acquired after 12 May 2026 can only be offset against other residential property income, not against your concreting income. If you bought the property before that date or you are buying a qualifying new build, full negative gearing still applies.

What Happens When Your Variable Rate Moves

Variable rates can move up or down. Lenders usually pass on Reserve Bank rate rises within days and rate cuts more slowly. When your rate increases, your repayment increases. If you are on interest-only, the increase is immediate. If you are on principal and interest, the increase applies to the next repayment cycle.

You do not get a choice about whether to accept the new rate. The loan contract allows the lender to adjust the rate at any time. Some lenders notify you before the change, others notify you after.

If your rate rises by 0.5 percentage points on a $450,000 loan, your monthly interest cost increases by around $190. If you are on a tight cash flow month and that increase hits at the same time as a delayed invoice or a materials cost blowout, it can push you into your overdraft or force you to dip into the offset account you were holding for GST.

Refinancing a Variable Rate Investment Loan

Variable rate loans do not have break costs. You can refinance to another lender anytime without penalty, though you will still pay application fees, valuation fees, and potentially settlement costs at the new lender.

Concreters who took out investment loans a few years ago might still be on rates that were competitive then but are now sitting well above current market rates. If you are paying 6.2 per cent and the current market for your loan type is 5.8 per cent, refinancing can reduce your repayment by several hundred dollars a month. That saving is immediate and ongoing.

Some lenders also offer cash-back incentives for refinancing, though those incentives are usually clawed back if you refinance again within two or three years. You need to check whether your current lender charges a discharge fee and whether your new lender charges an application fee or ongoing account-keeping fees that might offset the rate saving.

If you hold multiple properties or you are looking to use equity in your investment property to fund another purchase, refinancing can also be the point at which you restructure your loans and release equity. We cover equity release strategies and refinancing pathways in more detail elsewhere.

Loan Features That Actually Matter

Not all variable rate investment loans come with the same features. Offset accounts, redraw facilities, and extra repayment options are common, but not universal.

An offset account gives you full access to your cash without touching the loan. A redraw facility lets you take back extra repayments you have made, but the lender controls whether and when you can access that money. Some lenders limit redraw to online requests, some require a phone call, and some charge a fee per withdrawal. If you need access to cash quickly to cover a supplier payment or a tax bill, the difference matters.

Some variable rate loans allow unlimited extra repayments, some cap the extra amount you can pay per year without penalty. If you want to throw lump sums at the loan when you finish a big job, make sure the loan allows it.

Portability is another feature. If you sell the investment property and buy another one, a portable loan lets you transfer the existing loan to the new property without reapplying or paying discharge and application fees. Not all lenders offer this, and the ones that do often require the new property to be purchased within a set timeframe after selling the old one.

Why Concreters Should Consider Variable Rates When Building a Portfolio

If you are buying your first investment property, a variable rate loan gives you flexibility to adjust your strategy as your business income changes. Concreters earning $120,000 one year might earn $180,000 the next if a commercial contract comes through. A variable rate loan lets you pay down the loan faster when income is high and pull back to interest-only when income drops.

If you are buying a second or third property, variable rate loans also make it easier to refinance the whole portfolio at once or to use equity from one property to fund the deposit on the next. Fixed rate loans lock you into a rate for a set term, and breaking them early costs thousands of dollars in break fees. Variable rate loans let you move when the opportunity comes up.

Concreters working on new housing estates or unit developments often see investment opportunities before the general market does. If you are pouring slabs in an area where land is being released and infrastructure is going in, you might want to buy before prices move. A variable rate loan lets you act quickly, refinance later if needed, and adjust your repayments as the property market and your business income change.

We work with concreters across Australia and connect them with lenders who understand trade income, seasonal cash flow, and the way equipment finance and investment loans interact. If you are buying your first rental or adding to an existing portfolio, we can show you which lenders offer offset accounts, which ones allow interest-only extensions, and which ones will actually lend to self-employed tradies without forcing you through low-doc pathways. More detail on investment loans for tradies and finance for tradies is available on our site.

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

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