Understanding Equity and Business Opportunities
As a Defence Force member, you've likely built substantial equity in your property over time. This equity represents a valuable resource that could help fund your business ventures, whether you're looking to start a new enterprise or expand an existing one.
Releasing equity in your property through refinancing allows you to access funds at typically lower interest rates compared to traditional business loans. This strategy can provide the capital injection your business needs while maintaining your current property ownership.
When Refinancing for Business Makes Sense
Several situations make refinancing to access equity particularly attractive for Defence personnel:
• Your current loan term allows for additional borrowing capacity
• You're looking to consolidate debts while funding business growth
• Your fixed rate period ending presents an opportunity to restructure
• You want to reduce loan repayments by extending terms while accessing funds
• Market conditions offer the potential to access lower interest rates
The Application Process for Defence Members
Working with experienced mortgage brokers who understand Defence Force requirements can streamline your refinancing journey. The application process typically involves:
- Financial Assessment: Review of your current financial situation including income, expenses, and existing commitments
- Documentation Gathering: Preparation of bank statements, payslips, and business plans
- Lender Comparison: Access loan options from banks and lenders across Australia
- Eligibility Checks: Verify special lender policies available to Defence personnel
Interest Rate Considerations
When refinancing to access equity, you'll encounter different rate structures:
Variable Interest Rate Options: These fluctuate with market conditions and often provide flexibility for additional repayments.
Fixed Interest Rate Options: Offer certainty for budgeting, particularly valuable when planning business cash flow.
Many Defence members benefit from conducting a home loan health check to determine if refinance interest rates could improve their overall position.
Maximising Your Refinancing Strategy
To optimise your refinancing outcome:
• Consider how accessing equity aligns with your business timeline
• Evaluate whether you want to change your loan term to suit new financial goals
• Assess if consolidating existing business debts into your mortgage provides advantages
• Review if refinancing could position you to release equity to buy the next property for investment purposes
Working with Specialist Mortgage Brokers
Defence-focused finance and mortgage broker services understand the unique circumstances of military personnel. They can:
• Navigate deployment schedules during application processes
• Access specialised lending products designed for Defence members
• Provide guidance on timing refinancing around postings or career changes
• Help structure loans that accommodate irregular income patterns
Structuring Your Business Equity Release
The loan amount you can access depends on several factors including your property's current value, existing mortgage balance, and serviceability. Most lenders allow borrowing up to 80% of property value without requiring mortgage insurance, though some offer higher ratios for Defence personnel.
Consider separating your business borrowing through:
• Split loan arrangements keeping personal and business portions distinct
• Interest-only periods on business portions to improve cash flow
• Flexible repayment options that align with business income cycles
Timing Your Refinance Decision
Market timing can significantly impact your refinancing success. Consider refinancing when:
• Property values in your area have increased
• Your credit position has improved since your original loan
• You have clear business plans requiring capital investment
• Current market conditions offer favourable lending terms
Managing Risks and Responsibilities
While accessing equity for business purposes offers opportunities, it's important to understand that your property secures the additional borrowing. Ensure your business plan demonstrates realistic returns and consider professional advice regarding:
• Business structure and tax implications
• Insurance requirements for increased borrowing
• Contingency planning for business setbacks
Call one of our team or book an appointment at a time that works for you to discuss how refinancing could unlock your property's potential for business growth.
