November 03, 2017
Steven Dal Molin
As we all know, Sydney property has done extremely well in the last 5 years or so and grown by approximately 70% since 2012! For example, if you purchased a $600k property in 2012, they would have made $420,000!. This equates to someone earning you $84k per year (tax free if it’s your owner occupied property!).
So now what? how can we best take advantage of this ‘Equity’ we have accumulated? Below are 5 strategies that clients have been using to ‘use’ the equity they have accumulated
Probably the most popular one! There isn’t a household in Australia who still doesn’t have that one last project to complete. You may be able to use the increased value of the property to draw money out to finally finish it off! If the new value of the property has increased and your borrowing capacity can support it, we can simply increase your current loan without changing lenders or structure. Usually a rule of thumb with lenders is $100k equity release for non-structural renovations.
Consolidate other loans
If you have other personal loans/car loans or credit cards with crazy interest rates it may be a chance to consolidate this debt onto the low home loan rates of today. This can bring instant relief if you have a credit card balance that you are struggling to get rid of and paying 20% interest on the balance. It also simplifies your banking by giving you one payment to make rather than juggle multiple accounts. It generally means your monthly commitment is less so maybe put that little bit extra into the loan to reduce your loan term!
Buy an investment property
This has certainly been a popular method for many Sydney siders. They have witnessed the benefit of property ownership having seen their own property grow in value, they look to replicate this success with an investment. Once you have equity, it may be possible to extract 20% + purchase costs from the existing property to put towards the new investment property. As with any investment, there is a risk so please get independent advice before deciding on investing.
Refinance to a better rate
Lenders love borrows with equity. It lowers the risk of them losing any money, so they reward clients by offering better discounts. It is worth checking to see if either your current lender or an alternate lender can save you some cash! I’m always happy to do a review for you!
Leave it alone!
Perhaps it is best to take advantage of the low rates and make a good dent in the loan. If you are in a position where you can comfortably make payments, then this may be the perfect opportunity to increase payments and take a good chunk out of the loan.
Thanks for Reading!
Steve Dal Molin