What are Investment Loans and How Do Public Health Dentists Buy?

Understanding Investment Loan Options for Public Health Dentists

As a public health dentist, you have access to investment loan options from banks and lenders across Australia that can help you build wealth through property investment. Investment loans are specifically designed for purchasing rental properties, offering different features and requirements compared to standard home loans.

When buying an investment property, you'll need to consider several key factors:

• Property types: You can invest in apartments, townhouses, or stand-alone dwellings
• Loan amount: Typically based on your borrowing capacity and the property value
• Interest rate: Available in both variable interest rate and fixed interest rate options
• Loan to value ratio (LVR): Most lenders offer up to 80% LVR without lenders mortgage insurance (LMI)

Calculating Your Borrowing Capacity

Your borrowing capacity depends on several factors including your income, expenses, and existing debts. As a public health dentist with steady employment, lenders typically view your application favourably. The application process requires:

1. Recent bank statements (usually 3-6 months)
2. Pay slips and employment verification
3. Tax returns for the previous two years
4. Details of existing assets and liabilities

Lenders will assess your ability to service the investment loan repayments alongside your existing financial commitments. The rental yield from your investment property can contribute to your borrowing capacity, though most lenders apply a discount to projected rental income.

Researching Property Investment Options

Before applying for an investment loan, thorough research of the property market is essential. Consider these factors when buying a rental property:

• Location and proximity to amenities
• Historical capital growth rates
• Rental demand in the area
• Property condition and potential maintenance costs
• Council rates and strata fees (for apartments and townhouses)

Investment Loan Interest Rates and Features

Investment loan interest rates are typically higher than owner-occupier rates, reflecting the additional risk lenders perceive with investment properties. However, many lenders offer interest rate discounts for professionals, including dentists.

Key investment property loan features to consider:

• Interest-only repayments: Available for initial periods, typically 1-5 years
• Offset accounts: Can reduce interest charges on your loan amount
• Redraw facilities: Allow access to additional repayments made
• Split loan options: Combine fixed and variable portions

Tax Considerations and Negative Gearing

Investment properties offer several tax benefits through negative gearing, where rental income is less than the property expenses including loan repayments, maintenance, and depreciation. This creates a tax loss that can offset other income, including your dental practice earnings.

Deductible expenses include:

• Investment loan interest rate charges
• Property management fees
• Repairs and maintenance
• Council rates and insurance
• Depreciation on fixtures and fittings

The Streamlined Application Process

Many lenders now offer a streamlined application process for professionals like public health dentists. This can reduce processing times and documentation requirements. When applying for your investment loan application, having a clear property investment strategy demonstrates to lenders that you've considered the long-term implications.

For your first investment property, consider starting with a property type you understand well. Many dentists begin with apartments or townhouses due to lower maintenance requirements compared to stand-alone dwellings.

Building Your Investment Property Portfolio

Once you've successfully purchased your first rental property, you may consider expanding your investment property portfolio. This strategy can accelerate wealth building through multiple income streams and capital growth opportunities.

Successful portfolio expansion requires:

• Strong equity position in existing properties
• Sufficient income to service additional loans
• Diversification across property types and locations
• Regular review of your property investment strategy

Additional Costs to Consider

When calculating investment loan repayments, factor in additional costs beyond the loan amount:

• Stamp duty (varies by state and property value)
• Legal fees and building inspections
• Lenders mortgage insurance (if LVR exceeds 80%)
• Ongoing property management and maintenance

As a public health dentist, your stable income and professional status provide advantages when accessing investment loan options. Working with a mortgage broker who understands the dental profession can help identify lenders offering the most suitable terms for your circumstances.

Building wealth through real estate investment requires careful planning and the right financing structure. With appropriate investment loan features and a well-researched property investment strategy, you can build a successful rental property portfolio that complements your dental career.

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 investment portfolio today.