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Is now the right time to pull equity out of your property?
As central banks around the world try to contain inflation, interest rates are expected to rise from their ultra-low levels to around 2.5 per cent by the end of this year in Australia.
For property buyers, especially those who have not experienced any rate rises over the past 10 years, the recent rate moves by the Reserve Bank of Australia (RBA) may seem drastic. Homeowners who have taken huge mortgages may not be happy with the increased repayments.
However, for property investors who have seen the value of their properties appreciate over the past two years, the current environment may actually offer some great opportunities.
In this video, Wealthi co-founder Domenic Nesci offered some practical and actionable tips on how property investors can take advantage of this buyers’ market.
“Despite the grim picture being painted in news headlines, property buyers have a lot of options and opportunities. The thing to remember is to keep a level head and a long-term view of your investment.”
If you want to know the different options and opportunities you can take advantage of, this video is a must-see.
In the meantime, here’s a list of some practical steps you can take as a property investor:
1. Review your mortgage situation – despite rising rates, some banks and lenders may be offering competitive rates and deals. Now is the time to shop around and look for the best deal. Talk to your bank or lender or your mortgage broker. Whether you have a fixed or variable loan, chances are there are other ways and mortgage combinations that will deliver better results.
2. Unlock your equity and use it to build your property portfolio – as property prices rose across Australia during the past two years, most likely the valuation of your property has also risen substantially. This means that you have built up healthy equity, which is now ready to be unleashed.
3. Refinance – to take advantage of the increased equity you’ve built up on your property, it may be a great time to refinance.
4. Buy to expand your property portfolio – the combination of high property valuations, bigger equity and competitive rates from lenders mean property buyers could actually be in a better position to build their property portfolios.
5. Negotiate – don’t limit your negotiation and shopping around to your banker or lender. In the current buyers’ market, it may also be worth talking to and negotiating with a builder or developer who may be willing to deliver a good deal.
6. Take advantage of government grants for property buyers – at the moment there are many government grants and incentives aimed at helping property buyers get into the market. Now is the time to tap into some extra funding to boost your buying capacity.
Domenic, who has more than a decade of experience in building a property portfolio, said
“You may be surprised how a lot of people start their property investment journey with as small as 5 per cent deposit.”
And if you already have a property or two that has appreciated in value during the past few years, this is the perfect time to pull out that equity to buy more and expand. Keep in mind that refinancing is best used when you’re thinking of buying something that will generate an income.
If you want to know how to go about refinancing your loan to get the best deal in this buyers’ market, contact our team of Investment and Lending Specialists: