Smart hacks to secure fixed rate investment loan features

Understanding Fixed Rate Investment Loans

As a painter looking to build wealth through property investment, understanding fixed rate investment loan features can make the difference between a profitable venture and a costly mistake. Fixed interest rates provide certainty in your loan repayments, which is particularly valuable when you're managing seasonal work variations common in the painting industry.

A fixed interest rate means your investment loan interest rate stays the same for a set period, typically one to five years. This stability allows you to calculate investment loan repayments accurately and plan your property investment strategy without worrying about rate fluctuations affecting your rental yield calculations.

Key Fixed Rate Features to Consider

When applying for an investment loan, several fixed rate features deserve your attention:

• Rate Lock Periods: Choose from one to five-year fixed periods
• Interest Rate Discounts: Some lenders offer discounts for investment properties
• Loan to Value Ratio (LVR) Options: Fixed rates may vary based on your LVR
• Property Type Flexibility: Coverage for apartments, townhouses, and stand-alone dwellings

Comparing Fixed vs Variable Options

While this article focuses on fixed rates, it's worth understanding how they compare to variable interest rates. Fixed rates offer:

• Predictable repayments for budgeting
• Protection against rate rises
• Certainty for negative gearing calculations
• Stable rental yield projections

However, you won't benefit from rate decreases during the fixed period, and breaking a fixed rate early often incurs penalties.

LVR Considerations for Fixed Rates

Your loan to value ratio significantly impacts your fixed rate options. Most lenders offer their most competitive fixed rates for LVRs up to 80%. If you're borrowing above this threshold, you'll need lenders mortgage insurance (LMI), which can add thousands to your loan amount.

For painters buying their first investment property, understanding how LVR affects your borrowing capacity is crucial. A lower LVR often means access to better fixed rates and more investment loan options.

Application Process for Fixed Rate Investment Loans

The investment loan application process for fixed rates follows these steps:

1. Research Property: Identify your target investment - apartment, townhouse, or house
2. Assess Borrowing Capacity: Determine how much you can borrow
3. Gather Documentation: Bank statements, income records, and property details
4. Compare Lenders: Access investment loan options from banks and lenders across Australia
5. Submit Application: Complete the streamlined application process

Maximising Your Investment Strategy

Fixed rate features should align with your property investment strategy. Consider these factors:

• Cash Flow: Fixed rates help predict rental property loan repayments
• Tax Benefits: Stable interest costs simplify negative gearing calculations
• Portfolio Growth: Fixed rates can support plans for expanding your property portfolio
• Market Timing: Lock in rates when they're favourable

Additional Costs to Factor In

When buying an investment property, remember these costs beyond your loan:

• Stamp duty (varies by state and property value)
• Building and pest inspections
• Legal fees and conveyancing
• Ongoing property management
• Insurance and maintenance

These costs affect your overall return on investment and should be factored into your calculations alongside your fixed rate repayments.

Professional Support Matters

Choosing the right fixed rate investment loan features requires expert guidance. As specialists in investment loans for tradies, mortgage brokers understand the unique financial situations painters face, from seasonal income variations to equipment financing needs.

Professional brokers can access investment loan options from multiple lenders, potentially securing better rates and features than approaching banks directly. They can also help with investment loan refinancing when your fixed rate period expires.

Building wealth through property investment as a painter requires careful planning and the right loan features. Fixed rate investment loans offer stability and predictability, making them an attractive option for many tradies entering the property market.

Call one of our team or book an appointment at a time that works for you to discuss how fixed rate investment loan features can support your property investment goals.