As a concreter, you understand the value of solid foundations - and that same principle applies when you're ready to invest in real estate. Buying an investment property can be a smart way to build wealth, especially when you have the steady income that comes with trade work.
Let's talk about how you can access investment loan options from banks and lenders across Australia to purchase your first investment property or expand your existing portfolio.
Understanding Investment Property Loans
When you're buying a rental property, you'll need a different type of loan compared to your home mortgage. Investment loans typically come with:
• Higher interest rates than owner-occupier loans
• Different loan to value ratio (LVR) requirements
• Stricter borrowing capacity assessments
• Various loan features tailored for property investors
Most lenders will finance up to 80% of the property value without lenders mortgage insurance (LMI). If you want to borrow more than this amount, you'll need to pay LMI, which can add thousands to your loan costs.
Choosing Your Investment Property Type
Your property choice affects your loan options and rental yield potential. Consider these options:
Stand alone dwelling: Often provides stronger capital growth but may have lower rental yields
Town house: Offers a middle ground between houses and apartments
Apartment: Usually delivers higher rental yields but consider potential maintenance costs
Research property markets thoroughly. Look at rental demand in the area, proximity to transport, schools, and employment hubs.
Preparing Your Investment Loan Application
The application process requires careful preparation. Lenders will assess:
- Your current income and employment history
- Existing debts and living expenses
- Bank statements from the past three to six months
- Tax returns and financial statements
- Details about the property you want to purchase
Ready to get started?
Book a chat with a Finance & Mortgage Brokers at Tradie Home Loans today.
As a tradie, your income structure might include both PAYG wages and contracting work. Make sure you have all documentation ready, including any ABN details and business activity statements.
Interest Rate Options and Calculations
You'll choose between variable interest rate and fixed interest rate options:
Variable rates fluctuate with market conditions but often start lower than fixed rates. Some lenders offer interest rate discounts for investment loans when you meet certain criteria.
Fixed rates provide certainty for your investment loan repayments over the fixed period, making it easier to calculate your property investment returns.
When calculating investment loan repayments, factor in:
• Principal and interest payments
• Property management fees
• Insurance and maintenance costs
• Stamp duty (varies by state)
• Council rates and strata fees
Property Investment Strategy Considerations
Many property investors use negative gearing as part of their investment strategy. This occurs when your rental income is less than your investment property expenses, creating a tax deduction.
However, focus on properties with solid rental yield potential. A property that generates good rental income will improve your cash flow and reduce your reliance on negative gearing benefits.
Working with Mortgage Brokers
Mortgage brokers can help you:
• Compare investment loan options across multiple lenders
• Understand different loan features and benefits
• Navigate the streamlined application process
• Negotiate better terms based on your circumstances
At Tradie Home Loans, we understand the unique financial situations that tradespeople face. Whether you're looking at your first investment property or building an investment property portfolio, we can help you find suitable loan options.
Moving Forward with Your Investment
Once you've secured pre-approval, you'll have a clear picture of your borrowing capacity and can confidently make offers on suitable properties. Remember that investment property loans require ongoing management - you'll need to monitor interest rates, review your loan features regularly, and consider refinancing opportunities as your portfolio grows.
Property investment can be rewarding, but it requires careful planning and the right financial support. With proper research and professional guidance, you can build a solid investment foundation that complements your trade income.
Ready to explore investment loan options for your next property purchase? Call one of our team or book an appointment at a time that works for you.
