Property is one of Australia’s favourite investments, but did you know that refinancing your home loan could provide the funds you need to buy an investment property?
Mention the term “refinancing” and thoughts of securing a lower home loan interest rate may spring to mind. However, refinancing can help you achieve much more – including the opportunity to become a property investor.
How? The answer lies in the way refinancing can let you tap into home equity – that’s the difference between the balance remaining on your loan, and your home’s market value.
It turns out that many Australian home owners have a significant amount of home equity to their name. Aussie’s 2016 Housing Equity report found Aussie customers had an average of $242,642 in accumulated equity.
That’s a lot of money tied up in your home, and it could be put to work achieving personal goals – like investing in a rental property while still leaving your savings intact.
Potential savings of refinancing
Of course, there can be other good reasons to refinance such as accessing improved loan features or to streamline debt management. Your Aussie Broker can provide details of how refinancing may help you achieve particular goals.
But one of the big pluses of refinancing is the potential to save money – possibly thousands of dollars over the life of your loan.
The thing is, many people don’t realise how much they could save, so it’s worth skipping the what-ifs and speaking to your Aussie Broker to know exactly how much extra cash you could pocket by refinancing.
How does refinancing to invest work?
Around one in two home owners say they would use the savings made from refinancing to pay a bit extra off their home loan. But if you’ve got dreams of becoming a property investor, the savings of refinancing together with your home equity could help you achieve this goal.
Put simply, refinancing your home loan may let you withdraw some of your home’s equity to use as a deposit for an investment property rather than stumping up a cash deposit. Then, a new investment loan secured by your investment property can provide the balance of funds needed.
Owning a rental place is a big step, so it’s important to get professional financial and tax advice. An investment property can be a great asset though. While tenanted it will generate regular rental income to help cover your loan repayments. And, along with many of the other costs associated with owning an investment property, the loan interest could be claimed on tax, which can help with your cash flow.
Talk to your Aussie Broker to see if refinancing your home loan could be the opportunity you’ve been looking for to become a property investor.