Refinancing to invest into property



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As the Australian property market experiences record low interest rates and a finance market that’s fiercely competitive among banks and lenders, it makes sense to refinance your current property and use savings or new features to invest in property, Savvy CEO Bill Tsouvalas says.

Savvy is one of Australia’s fastest growing finance brokers, serving Australians with the lowest rates using the latest in technology. Founded in 2012, BRW listed Savvy as one of Australia’s Fastest Growing Companies in 2015. Though they focused on personal and automotive finance, they’ve branched out into home loans and helping Australians finance investment properties through home loan refinancing.

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As the Australian property market experiences record low interest rates and a finance market that’s fiercely competitive among banks and lenders, it makes sense to refinance your current property and use savings or new features to invest in property, Savvy CEO Bill Tsouvalas says.

Refinancing to maximise investment returns

“Refinancing seems like a daunting process,” says Tsouvalas. “But the fact of the matter is, the hard part of refinancing is finding the right deal that suits your goals for investment.

“We all have a range of options for investing in property, and it’s essential you have a short-term and long-term strategy for investment. Right now, using rental returns from your property to help pay off your current mortgage is an ideal goal. But do you want to expand your portfolio? Do you plan to use property investment to fund your retirement, or other financial goals?

Don’t just look at low interest rates

“It’s not all about the rate, either. The lowest interest rate may look attractive on paper, but once you get to the finer detail, a refinancing package with facilities such as redraws or offsets could save you more in interest than any percentage point difference advertised by a bank or lender.”

Invest in property the Savvy way

“Savvy has a wealth of knowledge in refinancing for investment, backed up by an expert team of financial professionals. If you’re looking to build a solid team to grow your property portfolio – or just get your foot in the property investment door, Savvy offers a range of products and services to tie up the loose ends of your existing loan and find you a competitive refinancing package that optimises growth.”

Key aspects to consider when refinancing for investment

  1. Time – if the ink is still drying on your current home loan, refinancing straight off the bat is not the way to go. Some banks and lenders may charge you hefty penalties for refinancing a loan in its relative infancy.
  2. Look at your Loan Value Ratio (LVR) – If you have a house worth $500,000 and still need to pay $200,000, you have a loan to value ratio of 40%. If you decide to buy an investment property with your existing loan using $200,000 of equity, it brings that LVR up to 80%. If you decide to exceed that LVR, you could be on the hook for Lender’s Mortgage Insurance (LMI.)
  3. Look for comparison rates – When shopping around for good refinancing deals, you should focus on comparison rates rather than just interest rates. The aim of the game is to reduce your outlay on sunk costs such as fees and charges. Knowing what you’ll pay up front is better than stumbling around in the dark.
  4. Find loans with investment friendly products – If your current home loan doesn’t have products such as an offset account or redraw facilities, you should look at refinancing packages that have them. Offset accounts can dramatically reduce the amount you pay in interest over the long term.
  5. Tax implications – Whenever you invest, be it in business, shares or property – Canberra or your state capital always wants their share, too. Before you venture into the world of investment property, you should consult an accountant about your tax obligations and potential strategies to minimise tax.
Refinancing to invest into property
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