Commercial Loan and Home Loan Tips: The Untold 7th Secret in Refinancing A Loan
There are six widely-understood reasons for refinancing a loan whether it’s commercial loans or medical professionals loans and I’m about to reconnect you with it. And then I’m going to reveal a seventh no one’s ever, ever told you and give you some investment and home loans Sydney tips and advice as well.
1. Get a Better Structure
Too many Australians don’t use the banks products properly, so refinancing is an opportunity to press the reset button. Some of the things you’re able to do are: Split loans, particularly if a portion is tax deductible; fix a portion to provide certainty and keep a variable split, against which there can be one or two offsets – to ensure your pay immediately saves you interest; linking a credit card to use the bank’s money for up to 55-days interest-free; and eliminate the hassle of manually paying your credit card bill and – if there’s always funds in your offset – never having to pay a cent of interest on your credit card.
2. Debt Consolidation
You can wrap small debts into a single structure and even use your home loan to pay off your car loan. While the latter would improve your capacity to service your loan and future loans, it does eat into your equity.
3. Unlock Your Equity
You could increase your limit to have more money in your offset account, or the extra funds could take the form of a separate split, with its own offset account. Of course, you’d only pay interest on what you actually use. Some banks allow you to unlock your equity all the way up to 80% of your property value – as long as you can afford to service it. Or if you’re ready to buy another property, having the funds to pay a deposit on auction day will help you avoid unnecessarily paying for a deposit bond. To avoid cross-collateralisation, many investment property buyers borrow 80% against the next property and 24% against their existing property. Both loans relate to the investment, so they’re tax-deductible, but the securities won’t be crossed and could even be at different banks.
4. Get a Better Interest Rate
If your loan is more than a year old, chances are you’re way behind the eight-ball. Bigger lifetime discounts are offered these days but are reserved for ‘new to bank’ clients. So many still have an interest rate which is above 4% which is silly.
5. Get a Cash Rebate
Sure, you wouldn’t switch just for a short-term kick-back. But CBA will pay you $2,000 if you switch to them and Westpac’s offering a staggering 500,000 velocity points if your loan’s more than a million. This will fly four people return to LA. This week, Tina and I are lodging an application to refinance our home loan to Westpac. We want to take the kids to Disneyland next year and now we won’t need to pay for the flights. Money for jam. iChoice can secure a home loan or investment loan rate starting with a “3” from both these banks. By the way, if you’re an existing Westpac customer, you don’t qualify. It’s our wacky system – loyalty simply isn’t rewarded.
6. Get Professional Representation
If your loan was directly from a bank, over time, they would have taken advantage of you – the Banking Royal Commission says so! By using an expert advisor at iChoice to get you into a better loan, you’ll immediately be professionally represented by someone with an impressive depth of knowledge whether you’re looking for the best home loans Sydney has to offer or just medical finance advice. You’ll be kept informed, and we’ll ensure your rate remains competitive over time, while also having access to advice about wealth creation and valuable help with avoiding mistakes along the way.
And the mystery 7th reason for refinancing is……
7. Better Tax Outcome
If you have a home loan, which must be serviced with your after-tax dollars and also have an investment loan which allows interest to be claimed as a tax deduction, you probably know you should concentrate on paying down the home loan faster.
Until a couple of years ago, you’d keep the investment loan interest-only, so the ‘good loan’ remained high and you could smash down the ‘bad loan’. Now that interest-only loans come at a higher rate, the benefit is washed away, so many of you have changed your investment loan to principal plus interest to get the better rate. Good – that was the right thing to do. So, let’s say you have 20 years remaining on your investment loan. If we help you refinance that, we’ll re-set it over a 30-year term. By stretching the loan term, the repayments will be less. The surplus can then be thrown in the ‘bad’ home loan. You’ll get a better rate and probably a refinance rebate, but you’ll also pay less tax and own your home sooner.
That’s the whole point, isn’t it?
Too many people tip the ATO – and there’s simply no need to.