Do you have idle equity?
Interest rates are at record lows, what should I do to take advantage?
On the back of this month’s RBA announcement the Australian lending landscape has entered uncharted territory with the official cash rate now sitting at 2%!
If you haven’t checked recently there are some fantastic opportunities available to restructure your finances, potentially saving you thousands in interest costs and most importantly set yourself up for the next investment opportunity.
Whatever the reason, now is the time to act!
Here’s how you can leverage the current low interest rate environment:
1) Get your property valued by the bank before they change their valuation policies
Property values are skyrocketing, especially in Sydney. Now is the best time to review your properties asset value and lock in a valuation at the top of the market before banks change their lending policies.
See article re pending policy change http://www.smh.com.au/business/banking-and-finance/banks-put-brakes-on-investor-lending-20150521-gh6imi?skin=dumb-phone
2) Our Finance Strategy – Extract your equity NOW, before the rules change
The higher the bank’s valuation on your property, the more equity you will have to reinvest in other investments.
We recommend extracting the equity from your property as cash and moving it into an offset account. What this will do is ensure that you have the capital ready for your next investment opportunity. If your loan is interest only, it won’t cost you anything to keep the money in your offset account.
The important thing is to maximise the amount of capital you have available for reinvestment. Ideally this amount should be 80% LVR (loan to valuation ratio) of the value of the property, as this will mean you can avoid paying Lenders Mortgage Insurance.
3) Look for the next investment opportunity
Now you are ready to invest in the next opportunity. Get advice from property professionals on which investments make the most sense for you and your personal circumstances.
Interested in reviewing your home or investment loan? Contact us for a second opinion.
