September 2020
Currently we have the lowest interest rates in history with no indication that things are going to change over the next two or three years.
However, amid the well documented doom and gloom, there is an opportunity to set some personal goals and perhaps look at investment opportunities, while the cost of funding is so inexpensive.
If you are an existing property owner with bank finance, the first investment you should make is setting time aside to review your current interest rates…you may find your return on this small investment is excellent!
A recent example of a good return on investment for a small amount of time was a $36,500 annualised interest saving for our two of our clients who are married, and both medical practitioners.
Our clients had a long-established relationship with a major bank and the opportunity to review their finance came about because the incumbent bank had recently lost experienced bankers and a knowledge vacuum ensued.
As a result, there was a lack of understanding and ability to analyse our clients financial information, so when a new residential property purchase was proposed, it resulted in an inexperienced banker declaring that an increase in funding was not possible.
On review of the clients finance arrangements, we not only confirmed that a future property purchase was possible, we were also able to reduce the interest rate by 0.95% on approximately $1,000,000 of investment property funding and we also reduced the interest rate by 1.35% on approximately $2,000,000 of owner occupied funding.
The result of these large interest rate discounts was an annualised interest saving of around $36,500!
On top of the $36,500 interest savings, optimal loan structuring to maximise deductible benefit was provided for the new investment property at a very low interest rate.
The outcome was an incredible return on investment for the effort of collating a handful of documents and filling out some forms.
Cutcher & Neale Finance can review your current finance arrangements at no cost, other than a little bit of time – and may even save you money!
