Variable Rate Investment Loans Explained
For SA Ambulance Service employees looking to expand into property investment, understanding variable rate investment loans is crucial for building a successful investment property portfolio. Variable interest rates fluctuate with market conditions, meaning your loan repayments can change throughout the loan term.
Unlike fixed interest rate loans, variable rates offer flexibility and potential savings when market conditions favour borrowers. When the Reserve Bank adjusts the cash rate, lenders typically pass these changes onto variable rate borrowers, affecting your calculating investment loan repayments.
The key advantage of variable rates lies in accessing additional loan features. Most lenders offer offset accounts, redraw facilities, and the ability to make extra repayments without penalties - features that support your property investment strategy.
How Offset Accounts Maximise Investment Returns
An offset account is a transaction account linked to your investment loan that reduces the interest charged on your loan amount. For every dollar in your offset account, you save interest equivalent to your Investment Loan Interest Rate on that amount.
Consider this example: if you have a $500,000 investment loan at 6.5% and maintain $50,000 in your offset account, you only pay interest on $450,000. This translates to significant annual savings while maintaining full access to your offset funds.
For paramedics with irregular shift payments, offset accounts provide excellent cash flow management. You can deposit your salary and allowances, reducing interest costs until you need the funds for living expenses or property maintenance.
Investment Loan Application Process
When applying for a investment loan, lenders assess your borrowing capacity differently than owner-occupier loans. They typically only count 70-80% of expected rental income when calculating your serviceability, making your SA Ambulance Service salary crucial for loan approval.
The investment loan application requires:
• Recent banks statements (usually 3-6 months)
• Employment verification from SA Ambulance Service
• Details of the target investment property
• Existing asset and liability statements
• Evidence of genuine savings or deposit source
Ready to get started?
Book a chat with a Finance & Mortgage Brokers at Paramedic Loans today.
Loan to Value Ratio Considerations
Lenders mortgage insurance (LMI) typically applies when your loan to value ratio (LVR) exceeds 80% for investment properties. However, some lenders offer LMI waivers for paramedics on investment loans, potentially saving thousands in upfront costs.
Most lenders cap investment loan LVR at 90-95%, requiring larger deposits than owner-occupier purchases. Planning your deposit strategy is essential, whether targeting an apartment, town house, or stand alone dwelling.
Consider how stamp duty affects your total investment. This varies by state and property value, impacting your overall borrowing requirements and cash flow planning.
Negative Gearing and Tax Benefits
Negative gearing occurs when your rental property expenses exceed rental income, creating a tax-deductible loss. For SA Ambulance Service employees in higher tax brackets, this can provide significant tax benefits while building long-term wealth through capital growth.
Key deductible expenses include:
• Interest on your rental property loan
• Property management fees
• Council rates and insurance
• Maintenance and repairs
• Depreciation on fixtures and fittings
When buying a rental property, consider both rental yield and potential capital growth. Research property markets thoroughly, as locations offering strong rental demand from your community often provide stable returns.
Accessing Investment Loan Options
Paramedics can access Investment Loan options from banks and lenders across Australia, with many offering interest rate discounts for medical professionals. Different lenders have varying appetite for investment lending, making broker assistance valuable for comparing options.
Some lenders specialise in investment loans for paramedics, understanding your employment stability and income structure. This can result in more favourable terms and a streamlined application process.
Whether buying your first investment property or expanding your property portfolio, having access to multiple lender options ensures you secure competitive rates and suitable loan features.
Making Your Investment Decision
Successful property investment requires careful planning and understanding of how loan features support your strategy. Variable rate loans with offset accounts offer flexibility that many investors find valuable, particularly when managing multiple properties.
Consider how offset accounts can help with future property purchases. Savings accumulated in offset accounts can become deposits for additional investments, supporting portfolio growth while minimising interest costs.
Remember to factor in all costs when buying an investment property, including legal fees, building inspections, and ongoing property management expenses. These affect your overall return on investment and cash flow requirements.
For SA Ambulance Service employees ready to invest in real estate, understanding these loan features helps you make informed decisions that align with your financial goals and career circumstances.
Call one of our team or book an appointment at a time that works for you to discuss your investment loan options and develop a property investment strategy suited to your situation.
