Why Investment Units Make Sense for Balmoral Investors
If you're considering buying an investment property in Balmoral, you're already thinking ahead about building wealth property. Investment units offer a practical entry point into the property market, particularly in sought-after Brisbane suburbs like Balmoral where the lifestyle appeal attracts quality tenants.
Units typically require a lower loan amount compared to houses, making them more accessible for first-time property investors. The body corporate handles external maintenance, which means fewer unexpected costs eating into your passive income. For investors looking to start their property investment strategy, a well-located unit can deliver strong rental income whilst positioning you for portfolio growth over time.
Understanding Investment Loan Options
When you're ready to purchase an investment unit, understanding your investment loan products is crucial. At LBK Lending, we help you access investment loan options from banks and lenders across Australia, ensuring you find the right fit for your financial situation.
Your investment loan features will differ from a standard owner-occupier home loan. Here's what you need to know:
- Interest rate: Investor interest rates are typically slightly higher than owner-occupier rates, but you can still secure competitive rate discounts through a mortgage broker
- Deposit requirements: Most lenders require at least a 20% investor deposit to avoid Lenders Mortgage Insurance (LMI), though no LMI options exist for certain professionals
- Loan structures: Choose between variable rate, fixed rate, or a split combination depending on your risk tolerance and market outlook
Interest Only vs Principal and Interest
One of the key decisions you'll face with your investment property loan is whether to structure it as interest only or principal and interest.
An interest only investment loan means you only pay the interest charges each month, not the principal. This approach:
- Reduces your monthly repayments, improving cash flow
- Maximises tax deductions because interest on investment loans is fully deductible
- Allows you to leverage equity more effectively if you're planning portfolio growth
- Works well when you're benefiting from negative gearing benefits
However, principal and interest repayments mean you're building equity in the property over time, reducing your overall loan amount and interest costs in the long run.
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Book a chat with a Finance & Mortgage Broker at LBK Lending today.
Investment Loan Features That Matter
When comparing investment loan products, look beyond just the Investment Loan Interest Rate. The investment loan features can significantly impact your property investment strategy:
Offset accounts: While less common on investment property finance, offset facilities can help manage your cash flow effectively
Redraw facilities: Allow you to access any extra repayments you've made, providing flexibility for future investments
Variable interest rate flexibility: Offers the potential to benefit from rate decreases and usually allows unlimited extra repayments
Fixed interest rate certainty: Locks in your investor borrowing costs for 1-5 years, protecting you against vacancy rate concerns during uncertain periods
Your borrowing capacity will depend on factors including the rental income you'll receive, your existing debts, living expenses, and the loan to value ratio (LVR) you're comfortable with.
Maximising Tax Benefits
One of the most compelling investment loan benefits is the ability to maximise tax deductions. When you purchase an investment unit, you can claim:
- All interest charges on your investment property rates
- Body corporate fees and strata levies
- Property management fees
- Repairs and maintenance (though improvements must be depreciated)
- Building depreciation and fixtures depreciation
- Insurance premiums
- Stamp duty (in some states, though usually depreciated)
- Other claimable expenses related to the property
Negative gearing benefits occur when your property expenses exceed your rental income, allowing you to offset this loss against your other taxable income. While you're making a paper loss initially, you're building wealth through capital growth and paying down debt.
The Investment Loan Application Process
Your investment loan application requires careful preparation. Lenders will assess:
- Your income and employment stability
- Your existing debts and financial commitments
- The property's rental potential (usually calculated at 80% of market rent to account for vacancy rates)
- Your savings history and genuine savings
- Your credit history
Calculating investment loan repayments before you commit helps you understand the true cost of investor borrowing. Remember to factor in ongoing costs like body corporate fees, which are common with units, as well as insurance, rates, and potential vacancy periods when you won't receive rental income.
Refinancing Your Investment Property
As your circumstances change and your equity grows, an investment loan refinance might make sense. You could:
- Secure a lower variable rate or fixed rate as your LVR improves
- Leverage equity to fund additional property purchases
- Access an equity release to renovate or improve the property
- Switch from interest only to principal and interest (or vice versa)
- Consolidate other debts to improve your overall financial position
A loan health check every couple of years ensures your investment property finance remains aligned with your wealth-building goals.
Why Choose LBK Lending for Your Balmoral Investment
Navigating property investment loan options can feel overwhelming, but working with experienced mortgage brokers streamlines the process. We understand the Balmoral market and can connect you with lenders who appreciate the area's investment potential.
Whether you're looking to purchase your first investment unit or expand your existing portfolio, we'll help you understand your options, access better interest rate discounts, and structure your loan for maximum tax benefits and financial flexibility.
Your journey to financial freedom through property investment starts with the right advice and the right loan structure. We'll work with you to ensure your investment loan amount, features, and repayment structure align with your long-term property investment strategy.
Call one of our team or book an appointment at a time that works for you to discuss your investment property finance options today.
