After a few years of solid, consistent repayments, you might find yourself with plenty of equity in your home. You may be considering refinancing your current home loan in order to use that capital, rather than having to wait until you sell. However, the idea of a “second mortgage” might be putting you off. After all, your first home loan was likely the largest financial commitment you’ve made to date, why would you want to do it all over again?
Home loan refinancing could, on the contrary, be the perfect way to pave the way to financial independence by unlocking equity and improving your portfolio. We’re here to show you how.
Mortgages don’t have to be painful.
Extend your portfolio
Once you refinance your loan, you might want to use that liquidity to invest in a second property. It’s a popular idea – using Australian Taxation Office statistics, CoreLogic RP Data describes how there are almost two million Australians that owned a rental property in 2013. Many of these investors will be borrowing in order to purchase their additional property.
Since then, refinancing has only gotten more popular: The Australian Bureau of Statistics reports a 2.1 per cent increase in the month of December 2015, and the trend has been growing steadily year on year. Evidently, Aussies are starting to catch on to the benefits of owning more than just one property.
Improve what you’ve got
Refinancing should be a considered, measured and carefully chosen tool in an investor’s repertoire.
Refinancing is also an option for experienced property investors. If you’ve found yourself borrowing to purchase in the past, you could find that negative gearing is starting to get the best of you. The tax benefits can maintain this strategy for a while, but eventually a time comes where you need to start pushing hard for profit.
To help boost your rental yield and push yourself closer towards positive cash flow, you could use the capital from refinancing to develop your existing portfolio. Whether it’s adding additional parking spaces, subdividing a larger property or just updating the aesthetics, home loan refinancing could give you what you need for further development.
Refinancing as a tool
Refinancing should be a considered, measured and carefully chosen tool in an investor’s repertoire. Whether you are looking to adjust your lending conditions or unlock equity for expansion, finding the right loan is integral if you’re considering refinancing.
Get the right advice. Talk to us, your local mortgage broker, to find out how you can use refinancing to build your wealth through property.