You have gone through a lot of trouble to get your original mortgage and you may wonder when or why anyone would want to consider mortgage refinance on his or her home. Many reasons could come up that would allow people to consider refinancing.

When you mortgage your home, the loan can be from twenty-five to forty years in length. During this time, interest rates can go up or down depending on a large number of other factors including the housing market. When large demands exist for homes, the rates are usually higher. When the market has too many homes, the rates can be lower to provide an incentive for people to buy a home. Depending on what was going on when you bought your home, your interest rates might be higher or lower than they currently are.

If you had bad credit when you first purchased your home, consider the mortgage refinance option to take advantage of how your credit may have changed over the years since the initial loan was made. Perhaps you want to lower your monthly payments. A mortgage refinance will allow you to do this because of the equity you may have built up as well. Many people want to take the mortgage refinance option to get extra money back to do home improvements on the home. The interest on this type of loan is very low and the improvement will increase the value of your home. It is a win-win situation.

When is a good time to refinance your mortgage? Check out what the interest rate was at the time you made the original loan. The rule of thumbs is that as long as the interest rate is different by at least two percent, you can consider this a good time to get the mortgage refinance option implemented. Remember that if your credit was bad at one time and you have worked to rebuild it, you may still be able to take advantage of a lower interest rate that was not available to you at that time. Ask you banker what possibilities you might have for a home mortgage. Most bankers will look for you at no charge.

If you are considering using the equity that you have built up on your home and the interest rates have dropped (not necessarily the suggested two percent), you can take extra advantage and get money back from your home and use the lower interest rates that a mortgage refinance option provides over a regular personal loan.

The other reason to take the mortgage refinance option is to get out of an adjusted rate mortgage and into a fixed rate home loan. Many people have found the adjustable mortgage rates to be a bad idea when the rates go much higher than they ever expected them too. A fixed mortgage rate will at least provide you with a solid knowledge of what you will have to pay today and in the future on your loan. Consider these reasons and you may find the time has come for you to consider the mortgage refinance option.

fMost Australian investors take out an investment loan when they are purchasing investment property. They are less likely to take out an investment loan when they purchase shares because obtaining funding for most share purchases is quite difficult.

 

Whatever the circumstance, if you are an in the investor property market then you should ensure that any investment loan that you organise works to improve the yield on your investment property over the term of the investment. A good well-structured investment loan can make a sound investment even better.

 

As a general rule most property investors have either

1. an existing home loan which they have paid down to a point where there is unutilised equity in their home property over which they can borrow to purchase an investment property or share portfolio. In addition they will take out an investment loan against the new investment acquisition.

Or

1. an existing home loan plus sufficient savings which they apply towards the investment property. Again the investor will take out an investment loan and utilise the savings to provide the balance of the purchase price.

 

In both these scenarios the investor can structure their investment loan and home loan to ensure a better outcome for them.

 

Firstly if as an investor you have a home loan then any savings you have should be applied in the first instance to reduce the home loan debt. Before doing so ensure that you have a redraw feature attached to your loan. Most home loans and investment loans these days do have a redraw feature but if yours does not, then request it of your lender, or refinance. Taken you have redraw your next step is to create a separate investment loan account – it is important under ATO rules not to mix home and investment loan debt, if you do mix your borrowings the ATO will require any additional repayments to be apportioned between your investment loan and home loan – it is much more tax efficient for you to have any extra funds applied to the reduction of your non-deductible home loan debt as opposed to your investment loan where negative benefits can be obtained.

 

Secondly, if you already have a home loan but have paid this down to a level that allows you to re-borrow funds for investment then again the best structure for you will be:

1. to have your existing home loan with Lender A
2. to add an investment line of credit under a separate account that takes the borrowing on your home property to 80% of its value. The investment line of credit is used to provide funds for:
• the balance of purchase price
• any shortfall between the rental income and interest / costs on the investment loan and property.
• A buffer in case of vacancies – instead of subsidising the investment loan interest from your personal income you can draw on the line of credit to meet the interest due on the investment loan and any other unexpected costs – there is no negative impact on your cash flow.
3. to arrange an separate interest only  investment loan with preferably a different lender, Lender B. This is a term loan with the maximum interest only period available.

 

By structuring your investment loan and home loan in this way you will maximise your benefits, build wealth and ensure that along the way you are not suddenly caught short of funds if a vacancy occurs or interest rates increase.

I was recently in the market to buy an investment property and checked with my bank to see what they could offer me on investment loan. I had thought that the interest rate on an investment loan would be no different to the interest rate on a home loan but I discovered that with my bank at least I would be charged a higher interest rate and fees on my investment loan than I would had I been

Why invest and why take out an investment loan?

People’s needs for investment are as varied as the investment vehicles themselves. Some want to own their home outright, pay the kids’ university fees, or take world trips; while others want to start their own business or retire on a comfortable income.

The reality for most of us is that we won’t be able to afford these things on our salary alone

An investment property is becoming a more popular choice for those seeking to create a revenue stream and also achieve capital growth through the investment property value increasing over time.

This can also be part of a strategic financial plan and should be considered by investors as part of a diversified portfolio. When considering an investment purchase you should also source the best

I recently decided the time was right to utilise some surplus cash I had available and began looking to purchase an investment property. Whilst it would have been easy to just dive in and find something that I could afford regardless of the location or potential growth, I thought it best to do some research knowing that my investment property was more than likely going to be a long term property

Australia’s borrowing at an all-time high, with each member of the population having an average debt of around $50,000 – twice the level of five years ago. Thankfully, total personal assets have also risen, drawn up by substantial rises in house prices, superannuation and the share market.

Nevertheless, with ever-increasing levels of household debt it's no wonder that debt consolidation personal

A few years back prior to buying my first home, I bought my first car and also at around the same time applied for my first credit card. Whilst this was my only alternative at the time due to a lack of savings, it wasn’t such a big deal as it was my only financial commitment. Things have now changed and with the rising home loan interest rates, I have suddenly found my overall level of monthly

With ever-increasing levels of household debt it's no wonder that debt consolidations are gaining popularity. Debt consolidation is a real option for most borrowers regardless of their circumstances in that interest rates on personal loans, car leases or other unsecured debt is always higher that that payable on a mortgage secured over real estate. Most borrowers however only consider debt

A record number of Australians will suffer mortgage stress and will face difficulty in paying their mortgages this year with a percentage of those risking repossession of their homes. A refinance of your loan may be an option that will assist in relieving this stress. As a matter of course you should review your home loan terms and conditions each year to check that they are the most suitable for