How to Purchase Your First Investment Property as a Midwife

Understanding Investment Loans for Property Purchase

As a midwife, buying an investment property represents a significant step towards building long-term wealth. Investment loans differ from standard home loans in several key ways, particularly regarding interest rates, loan to value ratio (LVR) requirements, and borrowing capacity calculations.

When you're buying a rental property, lenders assess your application differently than they would for an owner-occupier loan. The rental yield from your investment property becomes part of your income calculation, though most lenders only count 70-80% of projected rental income when determining your borrowing capacity.

Types of Investment Properties to Consider

Your property investment strategy should align with your financial goals and risk tolerance. Consider these property types:

• Apartments: Often require lower initial investment and may offer higher rental yields in urban areas
• Town houses: Provide balance between affordability and potential capital growth
• Stand alone dwellings: Typically offer stronger capital growth potential but require larger deposits

Each property type carries different considerations for stamp duty, ongoing maintenance costs, and potential rental returns.

Investment Loan Features and Interest Rate Options

When applying for an investment loan, you'll encounter various interest rate structures:

Variable Interest Rate
• Fluctuates with market conditions
• Often provides more flexibility for additional repayments
• May offer interest rate discounts for professional packages

Fixed Interest Rate
• Provides certainty for budgeting purposes
• Protects against interest rate increases during the fixed period
• Typically available for 1-5 year terms

Calculating Your Borrowing Capacity

Lenders evaluate several factors when determining your investment loan application:

1. Income stability: Your nursing career provides regular income, which lenders view favourably
2. Existing debts: Credit cards, personal loans, and HECS debts affect borrowing capacity
3. Living expenses: Lenders use either your declared expenses or a benchmark figure
4. Rental income: Projected returns from your investment property

Loan to Value Ratio and Lenders Mortgage Insurance

Most lenders require a higher deposit for investment properties compared to owner-occupier loans. Typically, you'll need:

• Minimum 10-20% deposit depending on the lender
• Lenders mortgage insurance (LMI) if borrowing above 80% LVR
• Additional funds for stamp duty, legal fees, and building inspections

LMI protects the lender if you default on your loan. While it increases your upfront costs, it allows you to enter the property market sooner with a smaller deposit.

Research Property Markets and Investment Locations

Successful property investment requires thorough research. Consider these factors:

• Local rental demand and vacancy rates
• Proximity to hospitals and healthcare facilities
• Public transport connections
• Future infrastructure developments
• Historical capital growth patterns

As a midwife, you understand the importance of accessible healthcare services. Properties near major hospitals often maintain strong rental demand from healthcare professionals.

Streamlined Application Process

The investment loan application requires comprehensive documentation:

• Recent bank statements (typically 3-6 months)
• Employment verification and payslips
• Tax returns and financial statements
• Details of the property you're purchasing
• Evidence of savings and deposit funds

Many lenders now offer streamlined application processes that can expedite approval times, particularly for healthcare professionals with stable employment.

Understanding Negative Gearing Benefits

Negative gearing occurs when your investment property's expenses exceed its rental income. This loss can offset your taxable income, potentially reducing your overall tax liability. Common deductible expenses include:

• Loan interest payments
• Property management fees
• Maintenance and repairs
• Depreciation on fixtures and fittings
• Insurance premiums

Consult with a qualified accountant to understand how negative gearing might benefit your specific financial situation.

Building Your Investment Property Portfolio

Once you've successfully purchased your first investment property, you might consider expanding your property investment portfolio. Equity growth in your initial property can provide deposit funds for subsequent purchases, creating a pathway to building substantial wealth over time.

Many successful property investors start with one well-researched property and gradually expand their portfolio as their financial position strengthens and their experience grows.

Accessing Investment Loan Options Across Australia

Nurse Loans provides access to investment loan options from banks and lenders across Australia. Our understanding of healthcare professionals' unique financial circumstances enables us to match you with suitable lenders and loan products.

Whether you're purchasing your first investment property or expanding an existing portfolio, professional mortgage broking services can help you understand the application process, compare loan features, and secure appropriate financing.

Calculating investment loan repayments involves considering the loan amount, investment loan interest rate, and loan term. Professional guidance ensures you understand all aspects of your investment property loan before proceeding.

Call one of our team or book an appointment at a time that works for you to discuss your investment property goals and explore suitable financing options.