As an early childhood educator, building wealth through property investment can provide financial security for your future. Investment loans with variable interest rates offer flexibility and opportunities that many investors find attractive when buying an investment property.
Understanding Variable Interest Rates for Investment Properties
A variable interest rate moves up and down based on market conditions and lender policies. Unlike fixed interest rates that remain unchanged for a set period, variable rates can fluctuate throughout your loan term. This means your investment loan repayments may increase or decrease over time.
For early childhood educators considering their first investment property, variable rates often provide:
• Lower initial interest rates compared to fixed options
• Flexibility to make extra repayments without penalties
• Access to offset account features
• Ability to redraw funds when needed
• No break costs if you choose to refinance
Key Investment Loan Features to Consider
When applying for an investment loan, several factors will influence your loan terms and borrowing capacity:
Loan to Value Ratio (LVR)
Most lenders require a maximum LVR of 80% for investment properties to avoid lenders mortgage insurance (LMI). This means you'll need at least 20% deposit plus costs like stamp duty and legal fees.
Property Type Considerations
Lenders may offer different terms depending on whether you're purchasing:
• Stand alone dwelling
• Town house
• Apartment
Each property type carries different risk assessments that can affect your interest rate and loan amount.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at Teacher Loans today.
Calculating Investment Loan Repayments
When calculating investment loan repayments, consider both the loan servicing costs and potential rental yield. Your rental property loan repayments should align with your property investment strategy and cash flow requirements.
Many early childhood educators benefit from negative gearing, where rental income is less than the property expenses, creating a tax deduction. However, ensure you can service the loan repayments from your teaching income.
The Application Process for Investment Loans
The investment loan application requires comprehensive documentation including:
- Recent pay slips and employment contract
- Bank statements showing savings history
- Tax returns from previous financial years
- Details of existing debts and expenses
- Research property information and rental appraisal
Teacher Loans offers access to investment loan options from banks and lenders across Australia, with many offering interest rate discounts for education professionals.
Building Your Investment Property Portfolio
Starting with your first investment property sets the foundation for expanding your investment property portfolio. Whether you're interested in a rental property in your local area or researching interstate opportunities, understanding the property market dynamics is crucial.
Consider factors such as:
• Rental demand in the area
• Capital growth potential
• Proximity to schools, transport, and amenities
• Maintenance requirements
Streamlined Application Process
Many lenders now offer a streamlined application process for investment loans, particularly for borrowers with stable employment like educators. This can reduce processing times and provide quicker access to finance when you find the right investment opportunity.
Working with experienced brokers who understand the education sector can help you access better loan terms and navigate the various investment loan options available.
Investing in real estate as an early childhood educator requires careful planning and the right financing structure. Variable rate investment loans provide flexibility that can adapt to changing market conditions and your evolving financial circumstances.
Call one of our team or book an appointment at a time that works for you to discuss your investment loan options and start building your property portfolio.
