Working FIFO presents unique opportunities for building wealth, and buying your first home doesn't always mean purchasing a traditional house. For many FIFO workers, a granny flat represents an accessible entry point into the property market while offering distinct advantages that align with your work-life situation.
Understanding Granny Flats as Investment Properties
Granny flats, also known as secondary dwellings or auxiliary units, are self-contained living spaces typically located on the same block as a main residence. When you purchase a granny flat, you're essentially buying an investment property that can generate rental income while you're on site.
For FIFO workers, this arrangement offers several benefits:
• Rental income during your roster periods
• Lower purchase price compared to standalone homes
• Reduced maintenance responsibilities
• Potential for capital growth in established areas
Loan Options for Granny Flat Purchases
Most Home Finance & Mortgage Brokers can access Home Loan options from banks and lenders across Australia specifically for granny flat purchases. However, the application process requires careful consideration of several factors:
Loan Amount and LVR Considerations
Lenders typically assess granny flats differently than traditional properties. The loan to value ratio (LVR) requirements may be more stringent, often requiring a larger deposit. Many lenders cap the loan amount at 80% of the property value to avoid lenders mortgage insurance (LMI), though some will consider higher ratios with LMI.
Interest Rate Options
You'll have access to both variable interest rate and fixed interest rate options for your investment loan application. FIFO workers often benefit from interest rate discounts due to their typically higher and more predictable income patterns.
First Time Home Buyer Considerations
While granny flats can be excellent investments, it's important to understand how this purchase affects your first-time buyer status:
First Home Owner Grants (FHOG)
Most states don't offer first home owner grants for investment properties, including granny flats you don't intend to live in. However, if you plan to occupy the granny flat as your primary residence initially, you may qualify for certain first time home buyer programs.
Stamp Duty Implications
Investment properties typically don't qualify for first-time buyer stamp duty concessions. Your mortgage broker can help you understand the stamp duty implications in your state and whether any concessions apply to your specific situation.
Financial Requirements and Application Process
When applying for a home loan for a granny flat purchase, lenders will assess your financial situation comprehensively:
Documentation Needed:
• Recent bank statements (typically 3-6 months)
• FIFO employment contracts and pay slips
• Tax returns and group certificates
• Details of existing debts and commitments
• Property valuations and rental assessments
Borrowing Capacity Assessment
Lenders calculate your borrowing capacity based on your FIFO income, existing expenses, and the potential rental income from the granny flat. Many banks and lenders nationwide now have specific policies for assessing FIFO workers' income, recognising the stability and higher earning potential of these roles.
Maximising Your Investment
Rental Income Potential
Granny flats in well-located areas often achieve strong rental yields. Research the local rental market to understand potential returns and factor this into your investment loan options assessment.
Tax Considerations
As an investment property, you can claim various tax deductions including:
• Interest payments on your investment loan
• Property management fees
• Maintenance and repairs
• Depreciation on fixtures and fittings
Offset Account Benefits
Many investment loan packages include an offset account facility. This allows you to offset your regular income against the loan balance, reducing the interest charged while maintaining flexibility with your funds during roster changes.
Getting Pre-Approved
Before you start property hunting, it's wise to get pre-approved for your first Home Loan. This process involves a preliminary assessment of your financial position and gives you confidence when making offers on granny flats.
The streamlined application process available through experienced mortgage brokers can help you understand your borrowing limits and identify suitable lenders for your circumstances.
Making Your First Investment Property Work
Purchasing a granny flat as your first investment property requires strategic thinking about location, rental demand, and your long-term financial goals. Consider areas with strong rental markets, good transport links, and potential for capital growth.
Your mortgage broker can provide access to banks and lenders nationwide, helping you compare investment loan options and find packages that suit your FIFO lifestyle and financial objectives.
Taking the Next Step
Buying a granny flat can be an excellent way to enter the property market, particularly for FIFO workers who want to start building wealth through real estate investment. The key is working with professionals who understand both the FIFO industry and property investment fundamentals.
Call one of our team or book an appointment at a time that works for you to discuss how a granny flat purchase could fit into your wealth-building strategy.
