‘Refinancing – Is your Equity working for you??’

Research shows nearly half of all Australian homeowners have never refinanced. That means that many homeowners are paying way too much for their loan & most likely they are in loans that are not suitable for their individual situation.

What’s worse is that many homeowners have equity in their homes that is sitting idle not earning anything. This is a costly mistake & will significantly impact your available funds at retirement.

Gone are the days when we stayed with the same loan or lender for the full term of a home loan – the mortgage market is now very competitive and it is important that homeowners take action on the largest single asset they have.

To help you understand the impact of releasing your equity, we can look at the below scenario:

David & Susan are both in their mid 50’s. They have a home worth $475,000 on which they owe $240,000 and they have no other debt. David works FT on $100,000/year approximately & Susan is retired & has no income. They have $190,000 combined in super and David has income protection & they both have sufficient life & TPD to cover the personal debt should a major life event happen.

David receives SG super from his employer and also contributes extra via a salary sacrifice arrangement.

They decided to refinance & release the equity allowing them to purchase a brand new investment home worth $450,000 earning $465/week rental income.

By the time David retires in approximately 10 years, they will own their home and coupled with the investment, the 2 properties are projected to be worth in excess of 1.25 Million

The investment loan will still be owing for $460,000 as the loan on this is Interest Only, but the net gain overall will be over $550,000 plus they will have grown their superannuation accounts substantially as well.

If they had decided to do nothing they would most likely still have a loan on the home in 10 years & they would have much less in super & their retirement would not be so rosie. By releasing the equity & buying an investment they will be more than $300,000 better off & their retirement will be much more comfortable.

Finally, you will never know if your financial situation could be improved if you don’t take that first step. Call us today to book an appointment.

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