For FIFO workers in Western Australia, buying an investment property can be a smart way to build wealth while you're working away. Whether you're looking at a town house, apartment, or stand alone dwelling, securing the right investment loan is crucial for your property investment strategy.
Understanding Investment Loan Options
As a FIFO worker, you have access to investment loan options from banks and lenders across Australia. The key is finding the right match for your unique income situation and investment goals. Investment property loans work differently from home loans, with lenders assessing:
• Your borrowing capacity based on FIFO income patterns
• The property's rental yield potential
• Your overall investment property portfolio goals
• Loan to value ratio (LVR) requirements
Most lenders will finance up to 80% of an established property's value without lenders mortgage insurance (LMI). Going above this threshold means paying LMI, which increases your upfront costs.
Choosing Your Investment Property Type
When you're buying a rental property, consider these popular options:
Apartments: Often provide solid rental yields in urban areas, particularly attractive to young professionals and students.
Town Houses: Offer a balance between apartment convenience and house features, appealing to small families.
Stand Alone Dwellings: Typically attract longer-term tenants, especially families looking for stability.
Before buying an investment property, research property markets in areas with strong rental demand. Consider proximity to employment hubs, schools, and transport links.
Interest Rates and Loan Features
Investment loan interest rates are typically higher than owner-occupier rates. You'll choose between:
• Variable interest rate: Fluctuates with market conditions, offering flexibility
• Fixed interest rate: Provides certainty for budgeting your investment loan repayments
Many lenders offer interest rate discounts for larger loan amounts or when you maintain multiple products with them. Some investment loan options include:
• Interest-only periods to maximise cash flow
• Offset accounts to reduce interest charges
• Redraw facilities for accessing extra repayments
The Application Process
Applying for an investment loan requires thorough preparation. For FIFO workers, this means:
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Gathering Documentation: Recent bank statements, FIFO employment contracts, tax returns, and rental estimates for your target property
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Calculating Serviceability: Lenders assess your ability to service the loan based on rental income (usually calculated at 80% of expected rent) plus your FIFO income
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Property Research: Demonstrate you've researched the property market and understand the investment's potential
The investment loan application process can be more involved than standard home loans, as lenders scrutinise the investment's viability alongside your financial position.
Tax Considerations and Negative Gearing
Many property investors utilise negative gearing, where rental income is less than the property's expenses (including loan repayments, maintenance, and depreciation). This creates a tax deduction against your other income.
For FIFO workers with higher tax brackets, negative gearing can provide significant tax benefits. However, ensure your investment property portfolio aligns with your long-term financial goals, not just immediate tax advantages.
Additional Costs to Consider
When calculating your total investment, factor in:
• Stamp duty (varies by state)
• Legal and inspection fees
• Property management costs
• Insurance and maintenance
• Council rates and strata fees (for apartments/townhouses)
These costs impact your overall return on investment and should influence your loan amount calculations.
Working with Finance & Mortgage Brokers
Given the complexity of investment loans and your unique FIFO circumstances, working with experienced finance & mortgage brokers can be invaluable. We understand the challenges FIFO workers face and can present your application in the most favourable light to lenders.
A streamlined application process means you can focus on finding the right property while we handle the financing complexities. We'll help you understand different investment loan interest rate options and structure your borrowing to maximise your investment potential.
Making Your Investment Work
Whether this is your first investment property or you're expanding an existing portfolio, success comes from careful planning and the right financing structure. Consider your investment timeline, risk tolerance, and how the property fits into your broader wealth-building strategy.
Regular reviews of your investment loan features and interest rates ensure you're getting the most from your investment property loan as market conditions change.
Invest in real estate with confidence, knowing you have the right support and financing structure in place. Your FIFO income provides excellent opportunities for property investment when structured correctly.
Call one of our team or book an appointment at a time that works for you.
