Looking To Invest? How To Access Equity In Your Home For Investment.
As we are in an unprecedented era with regards to the Covid-19 pandemic, we are see things that have not been witnessed in a long time. The stock markets have had huge losses in the past few months fueled by economies coming to a grinding halt. It is indeed a scary time for all of us, and while most of us are doing what we can to weather the storm and just make it our to the other side, a few of my clients are coming to me to lend money to invest. Some are seeing the downturn as an opportunity.
I will make my confession early, I know very little about shares and the stock market, and other than my superannuation, I do not have any investments yet. As a mortgage broker, I cannot give financial advice, and I would never want to. This blog is more to guide you should you need direction on how to access funds for investment, and should not be constituted as financial advice. You should always chat with a good financial advisor or accountant first before looking at investing. If you are looking for great mortgage brokers, Castle Mortgages are brokers who can help you structure your finances as necessary, and we are based in Adelaide and support Adelaide and the surrounding area. If you need a good accountant or financial planner, we can point you in the direction of a few that we feel fit the bill.
Once you have had the relevant advice and decided that investing is for you, you can access the equity in your home loan by refinancing with your current lender or new lender for a “cash out”. What this effectively means is that you are increasing the size of your home loan and accessing the funds that you have paid off on the house or gained through capital growth by holding on to or improving the property. Many lenders will allow this with a simple statement of purpose if the loan to value ratio is 80% and under, as long as the “cash out” amount is below a set value. Many lenders will require a letter from the financial planner that you are using to make sure you are not taking a gamble and are making as an informed decision as you can, which I fully support. The thing to remember is your loan is growing larger, and you will be paying more interest over the life of the loan, and you will be possibly extending the term that it takes to pay the loan off too.
Usually, the portion of the loan that is used for investment purposes will fall under investment Home Loan rates. Just like with an investment home loan, you have the option to either fix the rate, or go variable, and pay principal and interest or interest only. Again a topic to have a chat about with your financial advisor. Once your new loan has settled, funds will be made available for you to use for investment.
In going through the whole refinance process, it may be beneficial for you to have a look at your current home loan scenario, while you are making the effort of getting all the loan documentation together and doing the legwork of a refinance. It can pay to make sure you are being as efficient as possible with your choice of current or new product a lender may be offering. A mortgage brokers’ job is to help you navigate the myriad of products available out there and help you make an informed decision as to what will work for you. Good Mortgage brokers will take the heavy lifting out of the paperwork that needs to be done and should make it a lot easier. Castle Mortgages are great Mortgage Brokers who are here to support you in structuring and obtaining your finance. We work in Adelaide and the surrounding area’s. We would love to have a chat with you with regards to your home loan and financing needs, so get in touch today.