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Refinancing your investment - how to know when it's time

Tuesday, 26th April 2016

In days of old, we'd go into a relationship with our banks much like a marriage - it was something you signed up for, knowing you'd be together for the best part of your life. But with the financial industry opening up to more competition, it can pay to walk away and find yourself a better deal.

How to know it's time

There are some more obvious signs that it's time to refinance:

  • Falling interest rates over a long period of time - which would also offer you lower mortgage repayments
  • Seeing the competition offer deals that appear to be better than what you're on
  • You may want to reduce the period of your loan
  • When you want to withdraw some of your equity (from either your personal or investment loan) to build your property investment portfolio
  • Your personal circumstances change and you're unable to meet the repayments as they stand

How to make the switch

Chances are, if you've been on a fixed mortgage for the past few years, you would have watched interest rates fall around you, but been put off making the switch because of costly break fees. This is where it would have paid off to get a mortgage broker on the job for you, to shop around and see what else was available. Make sure you give them the big picture about your entire banking needs - thrown together with your credit card and savings accounts, there could be better offers awaiting your entire financial package.

When you may stay

It's good practice to look at what's available on the market for both your personal and investment financing. When you put the two together, that's a fair bit of capital to withdraw from your bank at one time - and they may try to strike a better deal to stop you from leaving. The leverage you have from owning two or more properties makes you a fine prospect for a financier and they should do whatever it takes to retain your business.

Refinancing isn't a decision to be made lightly - get professional advice and look at the entire picture with your property portfolio specialist, financial adviser and accountant on board to help put forward the best plan for your needs.

If you do receive a better deal from a broker or competitor, don't be afraid to present it to your current financier and see if they are prepared to meet the competitor's offer. If so, make sure you have the current and competitor's offers in writing for comparison purposes. As the saying goes a bird in the hand is better than 2 in the bush…. Then I suggest put a note in your diary to assess your financing strategy every two years at a minimum

Until next time,

Christine



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