Top tips to secure variable rate investment loans

Understanding Variable Rate Investment Loans

As a pharmacy assistant, you may be considering expanding your financial portfolio by buying an investment property. Variable rate investment loans offer flexibility and potential advantages that could align with your property investment strategy. Unlike fixed interest rates that remain constant for a set period, variable interest rates fluctuate with market conditions, potentially offering lower repayments when rates decrease.

When you access investment loan options from banks and lenders across Australia, you'll discover that variable rates often start lower than their fixed counterparts. This can be particularly beneficial for your first investment property, as it may reduce your initial financial commitment while you establish your investment property portfolio.

Key Features of Variable Rate Investment Loans

Variable rate investment loans come with several features that make them attractive for property investors:

• Flexibility in repayments - Many lenders allow additional repayments without penalties
• Redraw facilities - Access to extra payments you've made if needed
• Interest rate discounts - Potential for better rates based on your borrowing capacity and loan amount
• No break costs - Unlike fixed loans, you won't face penalties if you refinance or pay out early

Calculating Your Investment Loan Requirements

Before applying for an investment loan, you need to determine your borrowing capacity. This involves assessing your current income as a pharmacy assistant, existing debts, and living expenses. Lenders will require recent bank statements and proof of employment to verify your financial position.

The loan to value ratio (LVR) plays a crucial role in your investment loan application. Most lenders prefer an LVR of 80% or below to avoid lenders mortgage insurance (LMI). However, if you're purchasing a town house, apartment, or stand alone dwelling with a higher LVR, LMI may be necessary but shouldn't deter you from proceeding.

Research Property Options for Your Investment

When buying a rental property, location and property type significantly impact your investment's success. Consider these factors:

• Rental yield - Calculate potential rental income against the purchase price
• Growth potential - Research the property market trends in your target area
• Property management costs - Factor in ongoing expenses for maintaining your investment
• Negative gearing benefits - Understand tax implications when rental income is less than expenses

The Application Process for Variable Rate Loans

The streamlined application process for investment property loans typically involves several steps:

1. Pre-approval assessment - Submit financial documents and property details
2. Property valuation - Lender arranges professional valuation of your chosen investment
3. Final approval - Complete documentation and settlement arrangements
4. Settlement - Transfer of ownership and loan funds

During this process, you'll need to budget for additional costs including stamp duty, legal fees, and building inspections. These expenses vary by state and property value, so factor them into your overall investment calculations.

Comparing Investment Loan Options

Different lenders offer varying investment property loan features. Some may provide better rates for certain property types, while others might offer more flexible lending criteria. When comparing options, consider:

• Interest rate structures - Some lenders offer tiered rates based on loan amounts
• Loan features - Offset accounts, redraw facilities, and repayment flexibility
• Lender policies - Acceptance of different property types and locations
• Service quality - Responsiveness during the application and settlement process

Managing Your Variable Rate Investment Loan

Once you've secured your rental property loan, monitoring interest rate movements becomes important. Variable rates can change monthly, affecting your calculating investment loan repayments. Set up automatic payments with a buffer amount to accommodate rate increases, and consider making additional repayments when rates are low to reduce your principal faster.

Building a successful investment property portfolio often starts with understanding how variable rates work with your property investment strategy. Regular reviews with your mortgage broker can help you take advantage of better rates or loan features as they become available.

Making Your Investment Work

Successful property investment requires ongoing attention to market conditions, tenant management, and loan performance. Your variable rate loan provides flexibility to adapt as your circumstances change, whether you're expanding your portfolio or adjusting your investment approach.

Remember that property investment is a long-term commitment. Variable rates may fluctuate, but historically, property values have shown steady growth over extended periods. Your investment property can provide both rental income and capital growth potential.

At Pharmacist Home Loans, we understand the unique financial circumstances of healthcare professionals like pharmacy assistants. Our expertise in investment loan options helps you make informed decisions about your property investment journey. Call one of our team or book an appointment at a time that works for you to discuss how variable rate investment loans can support your financial goals.