Investment Loan Features to Consider When Building Wealth

What Makes Investment Loan Features Different?

As an NDIA employee, you're likely familiar with careful planning and strategic thinking. The same approach applies when you're looking at investment loan features to build wealth through property. Unlike owner-occupied home loans, investment property finance comes with specific features designed to help property investors maximise tax deductions and generate passive income.

When you're buying an investment property, understanding these features can make a significant difference to your property investment strategy and overall financial outcomes. Let's explore the investment loan features that matter most to NDIA employees looking to create financial freedom through property investment.

Interest Rate Options for Property Investors

One of the most important investment loan features is choosing between variable rate and fixed rate options. Each has distinct advantages depending on your circumstances and property investment strategy.

Variable Interest Rate

A variable rate investment loan means your interest rate can move up or down based on market conditions. This option often comes with:

• Flexibility to make extra repayments
• Potential for interest rate discounts when rates fall
• Access to features like offset accounts and redraw facilities
• No break fees if you decide to refinance

Fixed Interest Rate

With a fixed rate, your investor interest rates remain locked for a set period, typically one to five years. This provides:

• Certainty with your investment loan repayments
• Protection against rising interest rates
• Easier budgeting for your rental property loan
• Peace of mind during volatile market periods

Many property investors choose a split loan, combining both variable and fixed portions to balance flexibility with certainty.

Interest Only vs Principal and Interest Repayments

Another crucial feature when considering investment loan options is how you structure your repayments.

Interest Only Investment Loans

Interest only repayments mean you're only paying the interest portion for a set period, typically five to ten years. This feature:

• Reduces your monthly investment loan amount repayments
• Frees up cash flow for other investments or expenses
• Can enhance negative gearing benefits
• Allows you to maximise tax deductions on interest payments
• Helps manage vacancy rate periods when the property is untenanted

For NDIA employees with stable employment, interest only investment loans can be particularly attractive as part of a broader wealth-building strategy.

Principal and Interest Repayments

With principal and interest, you're paying down both the loan amount and interest. This approach:

• Builds equity in your investment property faster
• Reduces your overall interest paid over the loan term
• Provides a pathway to owning the property outright
• May offer slightly lower investor interest rates

Tax Benefits and Investment Loan Features

The tax advantages available through investment property finance are substantial, and certain loan features help you maximise these benefits.

Claimable Expenses

When you have an investment loan, numerous costs become claimable expenses:

• Investment loan interest payments
• Lenders Mortgage Insurance (LMI) premiums
• Loan application and establishment fees
• Ongoing account fees
• Investment loan refinance costs

These claimable expenses reduce your taxable income, which is particularly valuable for NDIA employees on higher income brackets.

Negative Gearing Benefits

When your rental income and claimable expenses exceed your need rental income, you can offset this loss against your salary, reducing your tax liability. This is where interest only investment loans become powerful tools for building wealth property portfolios.

Loan to Value Ratio (LVR) and Investor Deposit Requirements

Your loan to value ratio significantly impacts your investment loan features and costs. Most lenders require:

• Minimum 10% investor deposit (90% LVR)
• 20% deposit to avoid LMI costs
• Lower LVRs for better investor interest rates

As an NDIA employee, you may have access to LMI waivers which can reduce your upfront costs when you don't have a full 20% deposit.

Equity Release and Leverage Opportunities

For those already owning property, equity release features allow you to leverage equity from your existing home to fund an investment property purchase. This strategy:

• Eliminates the need for a cash investor deposit
• Accelerates portfolio growth
• Allows you to keep savings for other purposes
• Can help you acquire multiple properties over time

If you're considering buying your first investment property, understanding how to leverage equity can significantly expand your investment loan options.

Additional Investment Loan Features to Consider

Offset Accounts

While offset accounts reduce the interest you pay (which decreases tax deductions), they provide flexibility for managing cash flow and can be useful during periods when you're preparing for your next property purchase or handling unexpected expenses like body corporate special levies.

Redraw Facilities

If you make extra repayments on your investment loan, a redraw facility lets you access those funds if needed. This feature offers flexibility while still allowing you to reduce interest when you have surplus cash.

Rate Discounts

Many lenders offer rate discounts based on factors like:

• Your loan amount
• Your LVR
• Your employment status (NDIA employees often qualify for preferential rates)
• Your existing banking relationship

Working with Public Home Loans means you can access investment loan options from banks and lenders across Australia, ensuring you receive competitive investor interest rates.

Calculating Investment Loan Repayments

Understanding your investment property rates and calculating investment loan repayments helps you determine affordability. Consider:

• Your investor borrowing capacity
• Expected rental income (accounting for vacancy rate)
• Ongoing costs including rates, insurance, and body corporate fees
• Stamp duty and other upfront purchase costs
• Maintenance and property management fees

These calculations ensure your property investment loan aligns with your financial goals and capacity.

When to Consider Investment Loan Refinancing

Your investment loan features should evolve with your circumstances. Investment loan refinancing might be appropriate when:

• You want to access better investor interest rates
• Your current lender's features no longer suit your needs
• You're ready to leverage equity for expanding your property portfolio
• You want to switch between interest only and principal and interest
• Fixed rate periods expire and you want to reassess options

Regular loan health checks ensure your investment loan products continue supporting your wealth-building objectives.

Your Investment Property Finance Journey

Whing the right investment loan features depends on your individual circumstances, financial goals, and property investment strategy. As an NDIA employee, you have access to specialised investment loans for public servants with features designed to support your path to financial freedom.

Whether you're buying your first rental property or expanding an existing portfolio, understanding these investment loan benefits and features ensures you make informed decisions that align with your long-term wealth-building goals.

At Public Home Loans, we specialise in helping NDIA employees navigate investment property finance options. Our team understands the unique opportunities available to public servants and can help you structure investment loan products that maximise your tax benefits while supporting portfolio growth.

Call one of our team or book an appointment at a time that works for you to discuss which investment loan features will help you achieve your property investment goals.