Top 5 Ways to Refinance and Access Equity for Investment

Why ADF Members Should Consider Refinancing to Access Equity

As an Australian Defence Force member, you've likely been building equity in your home over the years. Whether through regular repayments or property value increases, this equity represents a valuable financial resource that can help you expand your investment portfolio. Refinancing to access this equity opens up opportunities that might otherwise remain out of reach.

Releasing equity in your property through refinancing allows you to leverage your current asset to fund your next investment venture. This strategy can be particularly valuable for ADF members who understand the importance of building long-term financial security.

Understanding Equity Release Through Refinancing

When you refinance to access equity, you're essentially increasing your loan amount beyond what you currently owe on your property. The difference between your new loan amount and your existing debt becomes available cash that you can use for investment purposes.

For example, if your property is worth $600,000 and you owe $300,000, you might be able to refinance up to 80% of the property's value ($480,000), giving you access to $180,000 in equity. This process involves reassessing your financial situation and going through a streamlined application process with your chosen lender.

Key Benefits of Refinancing for Equity Access

There are several advantages to this approach:

1. Lower Interest Rates: Investment funds accessed through equity release typically attract lower interest rates than personal loans or credit cards
2. Tax Advantages: Interest on funds borrowed for investment purposes may be tax-deductible
3. Flexible Loan Terms: You can often change your loan term to suit your repayment capacity
4. Debt Consolidation: Opportunity to consolidate debts into one manageable repayment

The Application Process for ADF Members

The application process for accessing equity through refinancing involves several key steps. You'll need to provide updated bank statements, proof of income, and details about your intended investment. Lenders will assess your current financial situation and determine how much equity you can access.

ADF members often have access to special lender policies that civilian borrowers don't enjoy. It's worth checking eligibility for these programmes as they can provide more favourable terms or reduce loan repayments.

Interest Rate Considerations

When refinancing to access equity, you'll need to choose between variable interest rate and fixed interest rate options. A variable rate offers flexibility but can fluctuate with market conditions. Fixed rates provide certainty but may be higher initially.

Many ADF members find themselves reassessing their loans when their fixed rate period ending approaches. This presents an ideal opportunity to consider equity release options while potentially accessing a lower interest rate on their entire loan.

Making Your Equity Work Harder

Once you've successfully refinanced and accessed your equity, the next step is putting those funds to work. Many ADF members choose to expand their property portfolio by using equity to fund a deposit on an investment property.

Alternatively, you might consider investment loan options that complement your equity release strategy. The key is ensuring your investment generates returns that exceed the cost of borrowing.

Regular Reviews Keep You on Track

Property markets and interest rates change regularly, which means your equity position and refinancing opportunities evolve too. Consider conducting a home loan health check annually to ensure you're making the most of your financial position.

This review process helps you identify when refinance interest rates might work in your favour or when your property's increased value creates new equity opportunities.

ADF-Specific Advantages

As a Defence Force member, you have access to loan options from banks and lenders across Australia that specifically cater to military personnel. These lenders understand the unique aspects of military careers and often provide more flexible lending criteria.

Whether you're looking to release equity to buy the next property or exploring investment loan refinancing options, specialised military lending can provide pathways that mainstream lenders might not offer.

Taking the Next Step

Refinancing to access equity requires careful planning and expert guidance. The right approach depends on your individual circumstances, investment goals, and risk tolerance. Professional advice ensures you understand all implications and choose the most suitable loan structure for your situation.

Remember, using equity for investment purposes does increase your overall debt level and associated risks. However, when managed properly, it can significantly accelerate your wealth-building journey.

If you're ready to explore how refinancing could unlock your property's equity for investment purposes, don't wait. Call one of our team or book an appointment at a time that works for you.