As a FIFO heavy diesel mechanic, you're in a unique position to build wealth through property investment. Your steady income and regular roster patterns can work in your favour when applying for an investment loan to purchase an established rental property.
Understanding Investment Loan Options
When buying an investment property, you'll need to access investment loan options from banks and lenders across Australia. Investment loans differ from home loans in several ways:
• Higher interest rates compared to owner-occupier loans
• Different loan to value ratio (LVR) requirements
• Specific lending criteria for rental properties
• Various loan features designed for property investors
Most lenders offer both variable interest rate and fixed interest rate options for investment loans. Your choice will depend on your property investment strategy and risk tolerance.
Types of Investment Properties
When researching property options, you'll typically choose between:
• Apartment: Often located in urban areas with strong rental demand
• Town house: Offers a balance between affordability and rental appeal
• Stand alone dwelling: Usually provides higher rental yields in suburban areas
Each property type has different implications for your loan amount, rental yield, and overall investment returns.
Key Financial Considerations
Loan to Value Ratio (LVR)
Most lenders require a maximum LVR of 80% for investment properties. This means you'll need at least a 20% deposit. If you borrow above 80%, you'll likely need to pay lenders mortgage insurance (LMI).
Interest Rate Discounts
Your borrowing capacity and loan amount can influence the interest rate discounts available. FIFO workers often qualify for professional package discounts due to their stable employment.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at FIFO Home Loans today.
Stamp Duty and Costs
When buying a rental property, factor in:
• Stamp duty (varies by state)
• Legal fees
• Building and pest inspections
• Loan establishment fees
These costs can significantly impact your initial investment, so include them in your property investment strategy.
The Application Process
Applying for an investment loan involves several steps:
- Assess your borrowing capacity: Lenders evaluate your income, expenses, and existing debts
- Gather documentation: Bank statements, payslips, tax returns, and rental estimates
- Submit your investment loan application: Many lenders now offer a streamlined application process
- Property valuation: The lender arranges a valuation of your chosen property
- Loan approval: Final approval depends on your financial position and the property
Calculating Investment Loan Repayments
When calculating investment loan repayments, consider:
• The investment loan interest rate
• Loan term (typically 25-30 years)
• Principal and interest vs interest-only options
• Potential rental income
Tax Benefits and Negative Gearing
Investing in real estate offers several tax advantages:
Negative Gearing: If your rental income is less than your property expenses (including loan repayments), you can claim this loss against your other income, potentially reducing your tax liability.
Depreciation: You can claim depreciation on the building and fixtures as tax deductions.
Expense Deductions: Property management fees, maintenance, insurance, and interest payments are typically tax-deductible.
Building Your Investment Property Portfolio
Many FIFO workers start with their first investment property and gradually build an investment property portfolio. Your regular income and disciplined saving habits from FIFO work can support multiple property investments over time.
The property market offers various opportunities, and established properties often provide immediate rental income and proven rental yields.
Working with FIFO-Specialist Brokers
FIFO workers face unique challenges when applying for investment loans. Standard lending practices don't always account for:
• Irregular pay cycles
• Allowances and overtime
• Employment contract variations
• Remote work locations
Specialist brokers understand these nuances and can present your application effectively to lenders who appreciate FIFO employment stability.
They can also help you compare investment loan options across multiple lenders, ensuring you secure appropriate terms for your situation.
Buying an investment property as a FIFO heavy diesel mechanic requires careful planning, but your strong earning capacity and employment stability position you well for property investment success.
Call one of our team or book an appointment at a time that works for you to discuss your investment loan options and start building your property portfolio.
