Property Investment Cape Town

How you can benefit from refinancing your properties

What is it?

So what exactly is refinancing, and how can it benefit you? Home refinancing is one of the most effective ways to access equity: simply put you can release cash based on the value of your properties which can be used to reduce monthly expenditure (cover shortfalls) in other properties or even be put towards a deposit for further investment properties.

 

Particularly in the current economy, people are looking for ways to reduce regular expenses and free up more disposable income each month. Saving money to pay a deposit for another investment property can be a long, seemingly endless process. One of the most effective ways to access the kind of sums of money needed to pay a deposit on a big-ticket item like property is to refinance an existing property.

 

When the process is managed efficiently by home refinancing experts, particularly, refinancing an existing property can prove to be one of the most intelligent financial decisions a homeowner can make.

 

How does it work?

The key to refinance is the fact that property increases in value over time. This means that if you’ve owned a property for a number of years, chances are it is worth more than it was when you bought it. So, refinancing this property means securing a new bond for your property based upon its current, increased value, and not on the amount it was valued at when you took out your initial home loan.

 

For example:

If you still owe R500 000 on your home loan, but your property’s current market value is R800 000 (due to the nature of property increasing in value over the years) there’s a difference in value of R300 000. This amount is what is known as equity – in financial terms, it is the difference between what you owe on an asset and the value of that asset.

 

This is what we call accessing equity, that you can use towards the purchase of a new investment property, to grow your portfolio and help secure financial freedom for yourself and your loved ones after you retire.

 

Why should I do it?

By refinancing your property based on its current value, you access the equity accumulated in your property. It is still credit being extended by your lender, and so you will pay interest on it. However, if you use this money to finance further investment by buying another investment property, which you then go on to rent to tenants and use the money generated by that rental to pay the monthly expenses for that property, rather than taking on more debt that would place you and your family under financial strain, you are helping to ensure a financially secure future for you and your family.

 

How do I do it?

If you decide to refinance your home, it’s important that you do it through a reputable company. They will be able to offer you the best advice, handle all the admin associated with processing the application and will negotiate with the bank to secure the best possible interest rate on your behalf.

 

IGrow Wealth Homeloans is an expert in this field and their goal is to ensure that the dream of owning a multiple residential property portfolio can become a reality for all, while providing a strategic and comprehensive home loan application service. Contact IGrow Wealth Homeloans on 021 979 2501 or email our head of Homeloans, Madelein, on madelein@igrow.co.za.

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