When you're ready to invest in real estate, understanding investment loan features can make all the difference in your property investment strategy. Whether you're buying your first investment property or expanding your investment property portfolio, knowing what to look for helps you access investment loan options from banks and lenders across Australia that suit your needs.
Interest Rate Options That Impact Your Returns
One of the most important features to consider is your interest rate structure. Investment loans typically offer two main options:
• Variable interest rate: Fluctuates with market conditions and can provide flexibility
• Fixed interest rate: Locks in your rate for a set period, offering predictable repayments
Many lenders also provide interest rate discounts for investment loans, particularly if you have a strong borrowing capacity or are purchasing multiple properties. The Investment Loan Interest Rate you secure directly affects your rental yield calculations and overall property investment returns.
Loan to Value Ratio (LVR) and Deposit Requirements
Most lenders offer investment loan options with LVR limits between 80% and 95% of the property value. Understanding these ratios helps you determine:
• How much deposit you'll need
• Whether you'll pay lenders mortgage insurance (LMI)
• Your total loan amount possibilities
If your LVR exceeds 80%, you'll typically need to pay LMI, which protects the lender but adds to your upfront costs when buying an investment property.
Flexible Repayment Features
Investment loans often come with repayment features that differ from home loans:
- Interest-only periods: Usually available for 1-5 years, helping with cash flow management
- Principal and interest options: Build equity while managing rental income
- Redraw facilities: Access extra repayments when needed
- Offset accounts: Reduce interest charges using your savings
These features are particularly valuable when implementing negative gearing strategies or managing multiple properties in your portfolio.
Property Types and Loan Variations
Lenders may offer different terms depending on whether you're purchasing:
• A stand alone dwelling
• Town house
• Apartment or unit
Some lenders have specific criteria for different property types, affecting your interest rate, loan amount, and approval chances. When you research property options, consider how your choice might impact your rental property loan terms.
Application Process Features
Modern investment loans often include application process improvements:
• Online investment loan application portals
• Streamlined application process for existing customers
• Pre-approval options to strengthen your position when buying a rental property
• Digital bank statements upload capabilities
Having your financial documents ready, including recent bank statements and income verification, helps speed up your investment loan application.
Tax and Financial Planning Integration
Many investment loans now offer features that support your broader financial strategy:
- Separate loan accounts: Keep investment and personal finances distinct for tax purposes
- Detailed reporting: Assist with negative gearing calculations and tax returns
- Professional packages: May include discounted rates and fee waivers
These features become more valuable as your investment property portfolio grows and your tax situation becomes more complex.
Additional Costs and Fee Structures
When applying for an investment loan, consider these common fee structures:
• Stamp duty implications (varies by state)
• Ongoing account keeping fees
• Valuation and application fees
• Early repayment penalties on fixed rate loans
Understanding the complete fee structure helps with calculating investment loan repayments and determining true borrowing costs.
Market-Responsive Features
Some lenders offer features that adapt to property market conditions:
• Parental guarantee to allow 100% LVR lending
• Flexible settlement terms and option to do upfront valuation
• Construction loan facilities for new properties
• 85% - 90% LVR with no LMI for investment property
These features can provide advantages as market conditions change and your investment strategy evolves.
Choosing the right investment loan features depends on your individual circumstances, property investment strategy, and long-term financial goals. Working with experienced mortgage brokers helps you compare options across multiple lenders and find features that align with your investment objectives.
Call one of our team or book an appointment at a time that works for you to discuss which investment loan features would suit your property investment plans.
