Refinancing & Cash Out

Thinking of Refinancing Your Home & Residential Investment Loans?

Refinancing is a hot topic right now given that the interest rate environment has shifted dramatically within the last few months with the Reserve Bank of Australia (RBA) acting to counter inflation by increasing the Official Cash Rate by 0.25% in May and then 0.50% in June.

Not surprisingly, most lenders have passed on the full rate rises and household budgets may start to come under real cash flow pressure in the short to medium term as rates are expected to continue to increase.

Notwithstanding the current interest rate environment, the lending landscape continues to be quite competitive with many lenders offering cash back incentives from $2,000 – $4,000. Whilst we do not necessarily advocate refinancing just for the cash back incentive, they do make for a great added bonus.

With the above in mind, it is very important that you stay on top of your home and/or residential investment loan interest rate to ensure that you are not paying above market and to minimise the impact that these interest rate rises may have on your household expenditure.

To put it into context, the average Australian home loan at the time of writing is sitting at just over approximately $600K. On a loan of this size, a 0.75% increase equates to an additional $375 per month to your repayment in extra interest. So it makes sense to ensure you have the most competitive rate that you can achieve, so long as all other loan features complement your goals and objectives.

Despite the rate increases, we are still seeing variable interest rates in the low 2% range from some of our lenders (depending on loan size, LVR and other lender metrics) so contact us now if you feel like you are paying too much interest.

Thinking of Future Investment Opportunities?

If you have plans for investing, whether it be in property, shares or other areas, it pays to be ready and if possible have money in the bank so that you can act quickly on any opportunity that comes your way before it’s too late.

This is where a ‘Cash Out’ loan application can help you be ready.

Cash Out is simply a lending term that means extracting the equity out of a property via a mortgage and converting that equity as cash in the bank. It is useful when you are in the early stages of looking for an appropriate investment however, have not necessarily found it but want to be ready to pounce when the opportunity arises.

Many lenders have restrictions around cash out applications, however we do have lenders that will provide cash out up to a Loan to Value Ratio (LVR) of 80% with just a purpose of funds stated and no verification required. This is very handy when you do not yet have the paperwork ready for the intended investment and helps you maintain agility so that you don’t miss your opportunity.

If you feel that you need any assistance with the above, please contact us now for an obligation free review and discussion.

Disclaimer: The information provided herein is for general information purposes only and does not constitute specific advice. It should not be relied upon for the purposes of entering into any legal or financial commitments. Specific advice should be obtained from a suitably qualified professional before adopting any investment/financial strategy.