Opting to refinance your investment property can benefit you greatly. Whether it be saving you money over the duration of your loan or refinancing to unlock your property’s equity, refinancing offers you flexibility and opens other avenues. Here we uncover the reasons for refinancing your investment property and break down the process.
When refinancing your investment property, you will need to compare your loan options across an array of lenders and understand the options given to you from each lender.
It is also worthwhile staying up to date with competing loan options over the duration of your investment property home loan so you are aware and can time your refinancing as best as possible. Check if your current mortgage competes with what other lenders are offering, if not you might find that there are better interest rate options out there or your current situation might necessitate that you change the terms of your loan. Ultimately, the best time to truly consider refinancing your investment property loan is when house prices are high and interest rates are low.
Once you have chosen a lender and a refinancing option which best suits your situation, you should get the application process underway as early as possible. The quicker you are able to move into your new investment home loan, the quicker you can start saving money and achieve what you set out to when opting to refinance. You will need to have up-to-date financial records and other documents which will be specified by your lender prior to application.
When comparing investment property refinances, it is important to thoroughly research your options across a variety of lenders. Looking for loan options with lower interest rates is a given, but also keep an eye out for special deals from lenders which may include discounted or waived fees. Lenders will go to great lengths to recruit you as a new customer so take advantage of it.
Don’t rely on what you see on the internet to make your decision. Instead contact lenders directly as they may provide you with individual discounts or waive certain refinancing fees to gain your business.
Refinancing an investment property provides a plethora of benefits to a property investor.
Refinancing an investment property can be a costly process. Depending on your individual situation there are long-term benefits to a refinancing, but the associated costs may also mean it’s not the right option for everyone. Costs will vary depending on the conditions of your refinancing and whether you’re staying with your current lender or opting for a new lender. The costs to refinancing an investment property can include but are not limited to:
Figure out exactly why you are looking to refinance your investment property, what you are looking to refinance to and weigh up the pros and cons of doing so. Whether it be lower repayments, a better interest rate or a longer loan term, it is important to have clarity over what you seek before commencing the process of researching your loan options. Remember, always consider if the long-term benefits outweigh the short-term costs.
When opting to refinance your investment property, it’s important to take into account the additional costs of the refinancing process. After calculating these costs into your budget, consider whether it is still the right option for your investment home loan.
Weigh up the option of a shorter-term loan when refinancing. If you opt to refinance to another 30-year loan when you have already been paying off your loan for several years, you are only extending your many years of debt. In addition, you will undoubtedly end up paying significantly more interest.
If you have some outstanding unsecured debt like credit cards or personal loans, now might be the right time to get rid of that high repayment unsecured debt. If you pay them out through your refinance you might find that this opens up your monthly budget significantly allowing you to save more and increase monthly cashflows.
Especially in the period prior to and the period of refinancing, make sure to not take out any more loans which will increase your debt. This is a time where you will not want to take any unnecessary risks which could jeopardise the success of your application.