The clever investor knows that assessing your investments regularly is key to identifying opportunities to build wealth. Knowing when to refinance an investment property could be vital to a successful strategy. So is now the time for you to refinance?
Talk to us and we’ll help you to decide! Despite recent tightening around investor lending, there are still some very competitive interest rates available from a variety of lenders.
In this article, we cover some of the common questions we get from our property investor customers – and if you do decide you’re ready to refinance, you can rely on us to make it easy!
WHY SHOULD I REFINANCE MY INVESTMENT PROPERTY?
There are generally two main reasons why you may want to refinance your investment property. These are to access your equity, or to change to a different loan.
If you’d like to expand your investment portfolio, refinancing to access your equity could be a good move. You could potentially use your equity as a deposit to buy another property, or to take advantage of some other kind of investment opportunity – talk to your financial planner to see what strategy is right for you.
Accessing your equity to renovate could also be a good move. It could help you add value to your investment property, fast-track its capital growth and perhaps improve the rental value to increase cash-flow.
WHAT KIND OF FEES ARE INVOLVED?
The good news is that when you refinance an investment property, the costs involved in exiting your existing loan and setting up another are usually tax-deductable. That includes the borrowing expenses and any exit fees or penalties. In the first five years of owning your investment property, you can usually claim borrowing expenses back incrementally, and if you refinance within that timeframe, you can claim the remaining tax deductions immediately. Talk to your tax accountant about the benefits appropriate to your situation. If you don’t have one, we’ll be happy to help you with a referral.
SHOULD I USE ONE LENDER OR MULTIPLE LENDERS?
Professional investors often prefer to use multiple lenders to avoid cross-collateralisation. Cross-collateralisation is where you secure a loan against two or more properties instead of one – which can be inconvenient when the time comes to sell, and risky if property prices should fall. If you use one lender, your properties may be cross-collateralised by default. Having said that, some investors may prefer to use one lender. Overall, it depends on your individual financial situation, goals and the size of your investment portfolio, whether you may choose to go with one lender or several. Talk to us and we’ll help you decide which loan structure is right for you.
SHOULD I REFINANCE ALL MY INVESTMENTS AT THE SAME TIME?
If you’re reviewing one mortgage, you might as well ask us to assess all of your investment loans to make sure they are up to scratch. You may decide you are happy with the deal you are receiving for some of the loans, and only proceed with refinancing others. Or you may decide it’s time to change the way all your loans are structured and if so, we’re here to help.
Talking to your financial planner or tax accountant is also a good idea, to make sure refinancing is the right strategy for you financially. If you’d like to chat or explore the kinds of investment loan options out there, please get in touch today. We’d love to help you find the right finance to fulfill your needs!
FINANCE FOCUS | SEPTEMBER 2017
The information provided in this page is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs. You should seek independent advice from your financial adviser before making any decisions.
AUSTRALIAN MORTGAGE AND FINANCIAL ADVISERS (AMAFA)
Phone: 07 3378 2056
Fax: 07 3378 2069