As a FIFO mining engineer, you're already making solid money, but have you thought about making your money work harder for you? Property investment planning could be the key to building long-term wealth while you're out on site.
Understanding Investment Loan Options
When you're ready to invest in real estate, understanding your investment loan options is crucial. Australian banks and lenders offer various products designed specifically for buying an investment property. Unlike owner-occupier loans, investment property loans typically come with:
• Higher interest rates (usually 0.1% to 0.5% above owner-occupier rates)
• Different loan to value ratio (LVR) requirements
• Specific lending criteria for rental properties
You can access investment loan options from banks and lenders across Australia, each offering different features and benefits. Some focus on variable interest rate products, while others provide attractive fixed interest rate options for property investors.
Choosing Your Investment Property Type
The property market offers several investment options, and your choice will impact your borrowing capacity and loan amount:
Apartments: Often require lower initial investment but may have higher ongoing costs
Town houses: Balance between affordability and rental yield potential
Stand alone dwellings: Typically offer stronger capital growth but require larger deposits
When you research property options, consider factors like rental yield, location, and potential for capital growth. Your property investment strategy should align with your long-term financial goals.
Managing Investment Loan Costs
Several costs come with buying a rental property:
Lenders Mortgage Insurance (LMI): Required when borrowing above 80% LVR
Stamp duty: Varies by state and property value
Interest rate: The ongoing cost of your rental property loan
Many lenders offer interest rate discounts for property investors with strong financial profiles. As a FIFO worker, your income stability can work in your favour when negotiating loan terms.
The Application Process
Applying for an investment loan involves a streamlined application process when you're properly prepared. Your investment loan application will require:
• Recent bank statements (usually 3-6 months)
• Employment verification and income details
• Details of your intended investment property
• Existing asset and liability information
For your first investment property, lenders will assess your borrowing capacity differently than for subsequent purchases. As you build your investment property portfolio, the rental income from existing properties can support applications for additional loans.
Calculating Investment Loan Repayments
Calculating investment loan repayments involves more than just the investment loan interest rate. Consider:
• Principal and interest vs interest-only repayments
• How rental income offsets loan costs
• Tax implications through negative gearing
• Property management and maintenance costs
Negative gearing allows you to claim tax deductions when your property expenses exceed rental income, which can be particularly valuable for higher-income earners like FIFO workers.
Property Investment Loan Features
Modern investment loans come with various features designed to help property investors:
Offset accounts: Reduce interest charges using your cash savings
Redraw facilities: Access extra repayments when needed
Interest-only periods: Maximise tax deductions in early years
Package deals: Combine multiple loans with fee waivers
These property investment loan features can significantly impact your overall investment returns and cash flow management.
FIFO-Specific Considerations
As a FIFO mining engineer, you have unique advantages in property investment:
• Higher income levels support larger loan amounts
• Tax benefits from negative gearing can be substantial
• Roster patterns allow time for property research and inspections
• Job security in the mining sector appeals to lenders
However, consider how your FIFO lifestyle affects property management. You might need professional property managers, which impacts your rental yield calculations.
Building wealth through property investment requires careful planning and the right financing structure. Your investment property portfolio can provide passive income and capital growth, complementing your FIFO earnings.
Call one of our team or book an appointment at a time that works for you to discuss how we can help structure your property investment loans to maximise your returns.
