As a bricklayer, you've got the skills to see potential in property that others might miss. Granny flats present a unique opportunity for tradies to invest in real estate while leveraging your understanding of construction quality and value. Let's explore how you can access investment loan options from banks and lenders across Australia to fund your granny flat investment.
Why Granny Flats Make Sense for Bricklayers
Granny flats offer several advantages over traditional investment properties like townhouses or apartments. These stand alone dwellings typically require lower loan amounts compared to houses, making them more accessible for your first investment property. Your trade background gives you an edge in assessing build quality and identifying properties with solid foundations – literally and figuratively.
The rental yield on granny flats can be quite attractive, especially in areas with housing shortages. Unlike larger properties, these compact homes appeal to specific tenant demographics, including young professionals, downsizing seniors, and students.
Understanding Investment Loan Basics
When buying an investment property, you'll need a rental property loan specifically designed for investors. These differ from owner-occupier loans in several ways:
• Interest rates: Investment loan interest rates are typically higher than home loans
• Loan to value ratio (LVR): Most lenders cap investment loans at 80% LVR to avoid lenders mortgage insurance (LMI)
• Deposit requirements: You'll generally need at least 20% deposit plus costs
• Income assessment: Lenders scrutinise your borrowing capacity more carefully
Calculating Your Investment Loan Repayments
Before applying for an investment loan, it's crucial to understand the numbers. Your repayments will depend on:
- Loan amount after your deposit
- Investment loan interest rate (variable or fixed)
- Loan term (typically 25-30 years)
- Interest-only vs principal and interest repayments
Many investors choose interest-only repayments initially to maximise cash flow and take advantage of negative gearing benefits. This property investment strategy allows you to claim the shortfall between rental income and expenses as a tax deduction.
The Application Process
The investment loan application process requires thorough preparation. Finance & mortgage brokers can streamline this by helping you compile necessary documents and comparing options across multiple lenders.
You'll need to provide:
• Recent bank statements showing savings history
• Tax returns and income documentation
• Details of existing debts and assets
• Rental appraisal for the intended property
• Building and pest inspection reports
Research Property and Location
As a bricklayer, you understand construction quality, but location research is equally important. Consider factors like:
• Local rental demand
• Transport links and amenities
• Council regulations around granny flats
• Future development plans
• Comparable rental properties in the area
Additional Costs to Consider
Beyond the loan amount, budget for:
• Stamp duty: Varies by state and property value
• Legal and conveyancing fees
• Building and pest inspections
• Loan establishment costs
• Ongoing property management
• Insurance and maintenance
Variable vs Fixed Interest Rates
Your property investment loan features will include choosing between variable and fixed interest rates. Variable rates fluctuate with market conditions but may offer interest rate discounts and additional features. Fixed rates provide repayment certainty but typically offer fewer features.
Many investors split their loan, fixing a portion for stability while keeping some variable for flexibility.
Building Your Investment Property Portfolio
Starting with a granny flat can be the foundation of a larger investment property portfolio. The rental income and capital growth can help fund future property purchases, building long-term wealth for your retirement.
Working with Specialists
Tradie Home Loans understands the unique financial situation of construction workers. We know your income patterns, seasonal variations, and the challenges you face when applying for finance. Our streamlined application process is designed specifically for the trades industry, helping you access investment loan options that suit your circumstances.
The property market offers genuine opportunities for tradies willing to invest time in research and planning. Your industry knowledge gives you advantages that desk-bound investors lack – use them to your benefit.
Call one of our team or book an appointment at a time that works for you to discuss your granny flat investment goals and explore suitable loan options.
