Charting a clear course through financial turbulence.
Navigating the current financial landscape can feel like uncharted territory, especially for borrowers in Generations X and Y. With inflation soaring, interest rates reminiscent of the 90s, and average house prices at 8.5 times the average income, many find themselves in the midst of a perfect storm for a potential cash flow crisis.
If you’ve been grappling with the question of whether you can sustain your current mortgage and hold onto your home, or your property investment loan, you’re certainly not alone. Many of us are diligently crunching numbers, searching for ways to manage and stay afloat amidst these challenging economic conditions.
For some, the stark reality is that selling and downsizing to a more modest property might be the most viable solution. However, before making such a significant decision it’s crucial to explore every avenue. Relief may be on the horizon; the big 4 major banks in Australia have projected a 1% reduction in interest rates over the next 12 months. So, if you can weather the storm, some financial reprieve may be in sight.
Just last week, Pulse Property met with a client looking to sell their investment property. Before kicking off the process, the agent consulted with Tony, and the Grow Home Loans team. After a thorough analysis of the situation, all parties – agent, client, and Tony unanimously concluded that it would be more advantageous for the client to refinance and hold onto their investment property rather than opt for a sale. The analysis and projection indicated that this decision could lead to a substantial $270,000 improvement in the client’s financial position over the next 5 years, after which they could consider selling the property. It’s a compelling real-life illustration of how having a consultation with a team of experts who are working in your best interest overall can make a significant impact in the short and long term.
In urgent situations, it’s essential to know that there are levers you can pull. Engaging with an expert mortgage broker is key to understanding what these options are including restructuring and refinancing your loan to retain your property. This could involve redrawing to manage a reduction in cash flow, converting part or all of the loan to interest-only, or, in some cases, applying to temporarily put your loan on hold.
While these strategies may not be ideal, from a mathematical standpoint, they often prove to be more cost-effective than the alternative of selling your home or investment and repurchasing a property. Avoiding the additional expenses of sale costs and buying costs can help you sidestep a situation similar to the one you’re already in.
If you are considering your options and feel you need assistance in understanding what the next step might be for you, the dedicated team at Grow Home Loans are ready to help you explore all your options. Tony and his team are committed to doing everything possible to help you keep you in your home and make good short- and long-term financial decisions.
To find out more register for our complimentary webinar discussing Hold, Sell or Refinance Strategies on Thursday 9th November at 7pm.
Please note the information herein is not financial advice.