For instance, many want to access funds in order to make a new investment or to renovate the existing portfolio. This way, they can expand their portfolio or achieve financial independence. However, when it comes to accessing the equity accumulated by property, investment property refinance options offers you a broad range of ways to do this.
Why opt for property investment?
Buying an investment property is one of the most advantageous investments you can ever make. Time has proven that there is no other better asset when it comes to investing.
First of all, the property market is a stable one compared to any other type of market, because good properties will always be in demand, no matter how tough times are.
Moreover, this type of property is difficult to find, which means that the supply is limited.
Furthermore, you have access to capital gains and rental income. This way, you will be able to access more equity in order to make further investments, or to pay off your mortgage faster.
Why should you consider refinancing an investment property?
The previous section shows the advantages of buying an investment property, which is generally regarded as an excellent strategy. But to do this, you need funds. Finding the necessary financial resources for a new investment can be tough. Not to mention that having a home loan at the moment will make the entire process even more challenging.
But you can forget about all these worries if you opt for refinancing an investment property. If you need funds for further investment, why not access your equity?
In fact, the money you should use as deposit could be necessary for you only once, no matter how many investment properties you are purchasing. How is this possible? When you buy the first property, you need a deposit, but then, you can use the equity built up in your first investment property to purchase the next one, and so on. Therefore, no other money is necessary for your second, third, etc. investment property.
What are the risks of this action?
Like any other method that you use to access equity and fund your investments, refinancing an investment property has risks, too.
First of all, you have to know that you need to pay the mortgage, no matter what. To put is simply, even though your property drops in value, your lender will not be interested in this.
In some cases, the property won’t be able to cover your mortgage repayments. For example, the rental income may be lower than the mortgage. In these circumstances, you need to top it up with other earnings to make the repayments. The tenants play a significant role when it comes to your income. If they pay their rent regularly, but don’t take care of your house, you may be needed to use significant amounts of money for repairs.