20/12/2018
Taking a dive in the property investment pool is something many Australians aspire to achieve. However, without putting in the work to reap the benefits of holding onto the right property and knowing when to refinance could soon see you missing on great opportunities to grow your portfolio.
Here are four essential tips when it comes to refinancing your home loan.
Time makes perfect
When it comes to investment portfolios, timing is essential. This also means before you refinance your loan you need to carefully analyse if the time is right and if the building is worth refinancing. One mistake that some investors make when investing in a property is jumping from one property to the next in a short time frame hoping to turn out a profit. This can make it difficult when you consider the transaction costs that take away from turning a profit in a short timeframe. It is vital to analyse the market that you are in and whether your property meets the criteria of refinancing your home loan.
There is capital growth potential
According to the ATO, there are 2,097,392 Australians that own 1 or more investment properties. Constantly assessing your investment portfolio can tell you whether you are ready to refinance. Savvy CEO Bill Tsouvalas advises that “Refinancing only a year or so after you purchase a property is not a good idea. It might cost consumers more in re-establishing a new mortgage than any potential savings.”
This is more so when your portfolio is promising capital growth potential. You can consider speaking to a financial advisor or a broker to assess your situation and give you professional advice on whether home loan refinancing will be the right move for you.
Constantly assess your home loan
One of the things that will have a huge influence on your investment portfolio will be your home loan. Having the wrong home loan can drag down your investments as you lose money. This is why it is vital to constantly assess your home loan fees and compare it with other lenders on the market to see if you are still getting the best deal. Check if the associated fees for wanting to leave your current lender will lead you to a loan that has better features and potential savings.
Your property has increased in value
It doesn’t make financial sense to invest in property that has decreased in value. Let alone refinance it if it has fallen in value. However, if your property has increased in value it means you will have enough equity in place to refinance your home loan. What this means is that if your home is worth $600,000 and you owe $400,000, you have $200,000 in equity which you can access for a refinance. You may be able to secure a better interest rate or borrow more to invest back into your property. Once again, it pays to speak to a financial advisor or broker to know what options are available to you.
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.
