Understanding Variable Rate Investment Loans for Law Enforcement Officers
As a law enforcement officer considering buying an investment property, understanding the fees and costs associated with variable interest rate investment loans is crucial for making informed financial decisions. Variable rate loans offer flexibility but come with specific fee structures that differ from fixed-rate alternatives.
Key Components of Variable Rate Investment Loan Costs
Interest Rate Structure
Variable interest rates fluctuate with market conditions, meaning your Investment Loan Interest Rate can change throughout the loan term. When applying for an investment loan, lenders assess your borrowing capacity and may offer interest rate discounts based on your profession, loan amount, and loan to value ratio (LVR).
Lenders Mortgage Insurance (LMI)
If your LVR exceeds 80%, you'll typically need to pay lenders mortgage insurance. This one-time cost protects the lender if you default on your rental property loan. LMI costs vary based on:
• Loan amount
• Property type (apartment, town house, or stand alone dwelling)
• Your deposit size
• Lender requirements
Application and Establishment Fees
Most investment loan options include establishment fees ranging from $600 to $1,200. During the application process, you'll also encounter:
• Valuation fees ($300-$600)
• Legal fees for property settlement
• Loan documentation fees
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Ongoing Costs to Consider
Monthly Account Fees
Many variable rate investment loans charge monthly account keeping fees between $10-$15. While this may seem minimal, it adds approximately $120-$180 annually to your investment costs.
Additional Property Costs
Beyond the loan itself, investing in real estate involves:
• Stamp duty (varies by state)
• Property management fees
• Insurance premiums
• Council rates and maintenance costs
Calculating Investment Loan Repayments
When calculating investment loan repayments for your first investment property or expanding your investment property portfolio, consider:
- Principal and interest payments
- Interest-only payment options
- Rental yield potential
- Negative gearing tax benefits
Property Investment Strategy Considerations
Research Property Markets
Before buying a rental property, thorough research of the property market is essential. Consider locations with strong rental demand and growth potential. Your property investment strategy should align with your long-term financial goals and risk tolerance.
Loan Features and Flexibility
Variable rate investment loan options often include useful property investment loan features such as:
• Offset accounts to reduce interest charges
• Redraw facilities for accessing extra payments
• The ability to split loans between variable and fixed portions
Application Process Requirements
The investment loan application requires comprehensive documentation including:
• Recent bank statements (typically 3-6 months)
• Employment verification
• Tax returns and financial statements
• Property research and purchase contracts
Many lenders now offer a streamlined application process for qualified borrowers, particularly those in stable professions like law enforcement.
Professional Mortgage Broking Support
Working with experienced mortgage brokers provides access to investment loan options from banks and lenders across Australia. Professional brokers can help compare interest rates, fees, and loan features to find suitable options for your circumstances.
At Blue Loans, we understand the unique financial position of law enforcement officers and can help structure investment loans that support your property investment goals while managing costs effectively.
Call one of our team or book an appointment at a time that works for you to discuss your investment loan requirements and explore the options available to you.
