Hi guys,
What does it mean to refinance? what does it involve and the advantages etc?
Thanx for the help.
Generally it means to change your lender and start a new mortgage. You might do this to get a better rate or to find a lender who may lend you a higher amount. Some people do it as they dislike the current arrangement.
There are costs and these should be considered.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
ok.. so how does getting a new appraisal and asking for a new mortgage is considered re-financing?
My question derived from the example of “real estate riches” book by dolf de roos. A property went up from $1 m to $3 million, and by refinancing he got $2.7m, and he used that to pay his $900k mortgage (he only had $100k at start), which leaves him $1.8 million.
Question being… how was he able to take out 90% of the property value as cash? Doesnt mortgage means to borrow money to buy a property? Isnt what he’s doing called ‘equity’? But.. isnt ‘equity’ taking out the amount of money that you’ve paid off for the mortgage?
I’m confused here . ..
Regards,
~F.T.~
You don’t need to buy a property.
I own a home atm. I could go to the bank and take a new loan against this property for any purpose I choose.
He is simply saying that he raised the loan because of the higher valuation and paid out his home.
There are some tax implications for that here in Australia that make it not as simple as it sounds!
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hmm.. interesting…
Do you mind going into detail of the tax implications for that?
Thanx a whole heap for the infos mortgagehunter
.This is simple but difficult to explain. A loan’s interest payments are deductible if the loan was used to buy an investment. If it is used to buy a home then it is not.
Regardless of what the loan was secured by.
So to draw money from a loan against a property that is an investment and use it to pay down a homeloan then this part of the loan will not be deductible.
In effect you have just transferred the money and had no real change tax wise.
I hope this makes sense.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
hm.. That makes full sense…
It also made me realise that homeLoan is different with mortgage for investment property…
Or the word ‘mortgage’ can apply for both?P.S. *I can feel my brain expanding
Both are mortgages Penguin. Homeloans are a marketing word that sounds less threatening!
You are doing well – some people take ages to grasp this stuff.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
thanx!
I would like to learn as much as I can during these couple of months while I gather up some deposit money and researching on potential investment property.
So any help is always appreciated
.These ‘gurus’ make things look easy don’t they. 90% lend on a $3mil property!
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terry, I think the ‘easy’ *cough, splutter* bit was the rise in value from $1M to $3M. I think it wasn’t a long time either!
Cheers
Mel
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