When and Why to Refinance Your Investment Property
As a periodontist building your wealth through property investment, understanding when and why to refinance your investment property can significantly impact your financial outcomes. Mortgage refinancing isn't just about accessing a lower interest rate - it's a strategic tool that can help you unlock equity, improve cashflow, and position yourself for further growth.
Understanding Investment Property Refinancing
Refinancing your investment property means replacing your current home loan with a new one, either with your existing lender or by moving to a different institution. The refinance process involves submitting a refinance application, undergoing a property valuation, and having your loan amount reassessed based on current market conditions.
For many periodontists, investment property refinancing presents opportunities that extend beyond simply reducing monthly repayments. It's about leveraging your existing assets to create new opportunities.
When Should You Consider Refinancing?
Several situations make refinancing your investment property particularly worthwhile:
Your Fixed Rate Period is Ending
If you're coming off a fixed rate and the variable interest rate offered by your current lender is higher than what's available elsewhere, it's time for a loan review. Many property investors find themselves stuck on high rates simply because they haven't explored what's available in the current market. When your fixed rate expires, you have an ideal window to reassess your position.
You Need to Access Equity
One of the most compelling reasons to refinance is releasing equity in your property. If your investment property has increased in value, you can access equity to fund additional investments, renovations, or other financial goals. This equity release strategy, sometimes called a cash out refinance, allows you to leverage your existing asset without needing to sell.
You're Paying Too Much Interest
If you haven't reviewed your loan in several years, there's a strong possibility that you could save money refinancing. Interest rates fluctuate, and lenders regularly introduce new products. Even a reduction of 0.5% on your interest rate can save thousands over the life of your loan.
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You Want to Consolidate Debt
Many periodontists benefit from consolidating other debts into their mortgage. If you have car loans, equipment finance, or personal loans at higher interest rates, you might improve cashflow by refinancing to incorporate these debts into your investment property loan.
Your Loan Lacks the Features You Need
Perhaps your current loan doesn't offer a refinance offset account or refinance redraw facility. These features can significantly impact your tax efficiency and financial flexibility, particularly for investment properties where maximising deductions is important.
Why Refinance Your Investment Property?
Potentially Access a Lower Interest Rate
The most obvious benefit is accessing a lower interest rate. Whether you switch to variable or switch to fixed, compare refinance rates regularly to ensure you're not leaving money on the table. Current refinance rates may be substantially lower than what you're currently paying, particularly if you secured your loan several years ago.
Release Equity to Buy the Next Property
For periodontists looking at expanding their property portfolio, using equity from your current investment property can provide the deposit needed for your next purchase. This strategy of releasing equity allows you to grow your investment portfolio without needing to save for another deposit from scratch.
Reduce Loan Costs
Beyond the interest rate itself, refinancing can reduce ongoing loan costs. You might find a loan with lower fees, no annual charges, or more favourable terms that reduce your overall cost of borrowing.
Improve Your Loan Structure
As your career progresses and your income grows, your loan structure should evolve too. You might want to lock in a rate for certainty, or shift to a variable interest rate for flexibility. Perhaps you want to establish an offset account to maximise your tax position, or access redraw facilities for unexpected expenses.
The Refinancing Process for Periodontists
The refinance process typically involves:
- Conducting a home loan health check to assess your current position
- Comparing current refinance rates and loan features
- Submitting a refinance application with your chosen lender
- Undergoing a property valuation to determine current equity
- Finalising documentation and settling the new loan
As a specialist in the dental field, you may have access to preferential lending terms that aren't available to the general public. This can include LMI waivers on higher loan-to-value ratios and more favourable assessment of your income.
Key Considerations Before You Refinance
Calculate the True Cost
While refinancing can save you money, there are costs involved. These may include discharge fees from your current lender, application fees for the new loan, and potential break costs if you're coming off a fixed rate period early. Ensure the savings outweigh these expenses.
Consider Your Investment Strategy
How does refinancing align with your broader investment goals? If you're planning to buy your next property soon, accessing equity might be a priority. If you're focused on reducing debt, a lower interest rate with higher repayments might be more appropriate.
Review the Interest Rate Environment
Understand whether we're in a rising or falling rate environment. This can influence whether you should lock in a rate with a fixed interest rate, or maintain flexibility with a variable interest rate.
Professional Assessment
Working with mortgage brokers who understand the dental profession means you'll receive advice tailored to your specific circumstances as a periodontist. We understand your income patterns, career trajectory, and the unique lending options available to you.
Moving Forward with Your Refinancing Decision
Refinancing your investment property isn't a decision to rush, but neither should you delay unnecessarily. If you're stuck on a high rate or missing out on features that could improve your financial position, a loan review is your first step.
For periodontists looking to optimise their investment property loans, professional guidance makes a substantial difference. Whether you're seeking to access equity for investment purposes, reduce your interest rate, or restructure your loans for tax efficiency, understanding your options is essential.
Call one of our team or book an appointment at a time that works for you. We specialise in helping dental professionals like you make informed decisions about refinancing and property investment strategies. Visit our Home Loans for Periodontists page to learn more about how we can help you achieve your financial goals.
