It’s been a tough month and our hearts are with Sydney and Melbourne and now South eastern Queensland over this very difficult time. In the midst of a cold wet winter, it all seems a bit glum.
Though when life gives you lemons or in our case record house prices it is worth looking for the lemonade recipes. For those not in the property market the record prices are not ideal, but for those of you who are, let’s get a big tumbler and some ice and see if we can have a tall glass of lemonade.
The higher house values mean for those with mortgages they now own a larger percentage of their property than the bank. This provides opportunities.
If you purchased your property with a minimal deposit then the Loan Value Ratio (LVR), which is the percentage of your loan against the value of the property may have been greater than 80%. This could mean that the interest rate you have could be high. Now with the house prices going up, the equity you have in your property may mean your LVR is well below 80%. Put simply, you are beginning to own a greater percentage of your home due to its increasing value. This increase in your equity provides you with an opportunity to re-negotiate your home loan to better interest rate as your risk profile to the bank has reduced.
One of our lenders has this offer where owner occupiers paying principal and interest with LVRs below 80% can take advantage of a two-year fixed rate at 1.89% per annum. (3.18%p.a. comparison). It is definitely worth exploring. Also, if you refinance there are often great refinance rebates. Contact me to see if this could benefit you.
For those of you already with a great interest rate and with ever increasing equity in your home, maybe now is the time to put that extra money to work. With both political parties on the same page when it comes to negative gearing and capital gains tax for investment properties, now is an ideal time to consider purchasing an investment property.
Having an investment property can be a great passive income stream to help build your wealth, especially in Canberra where property prices have risen 22% over the last twelve months and rental return is one of the highest in the country.
Until next time, stay warm and healthy.
Feel free to contact me to get a home loan health check on your current lending.
Ph 02 6162 2740
Mob 0411 220 208