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Refinancing when you don’t have equity

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Your Investment Property | 28 Mar 2013, 10:17 AM Agree 0
How do you refinance when your property has lost value or when you’re all out of equity? Your Investment Property explores your options
  • Jenny | 25 Oct 2013, 07:35 AM Agree 0
    Why would anyone suggest pay more into your home loan to build up usuable equity. CASH IS KING. If you want to do another project save the money into a separate account and use that down the track. Trying to get a bank to unlock equity is one of the hardest things to achieve. They have such ridiculous parametres that the valuer is going to value the property at 20 - 40% below which means you will be disappointed if your home loan structure is set that you cant just draw out that money without their permission.

    On a side note I honestly think it is about time their was an Australia wide class action against valuers and the banks for valuations. The valuers don't want to get sued by the banks so instead they significantly devalue your home, when you indirectly pay them, which could cause unnessary hardship or having to sell the home just to access your funds that you earned and deserve if you are ina position to make the repayments.

    Is this a "Valuation"??? NO. They do not earn that title in my opinion. They are guestimators out their trying to earn a living doing an easy job while protecting their own arse.

    So this article was quite humorous to me in saying put more money into your home loan to build up equity. Actually humourous is the wrong word...it is actually scary to be advising people to put more into their home loan. Building up equity implies you want to use it for something. Now if you just want to pay off your loan as quickly as possible that is a different story but that is not what this article is about.

    Don't ever give the bank much more than what you need to. Be in control of your own money. Get a loan with an offset account so the money you save you control is still working against your home loan to reduce the interest.

    Doing this you will be cash ready for your next project, you will not have to spend money refinancing to draw on equity, have the flexibility to go to a different bank for your new project (not cross securitising your home is a must - meaning do not tie up one home to buy another, if you get in trouble that bank will take both) and all in all will cause you less sleepless nights and ulcers.

    Hope this saves a few people from making a big mistake they could make on the advice of this article.
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