It’s very common for us to recommend to our clients that they review their financial position regularly, which helps them stay informed of market changes and how these may apply to their own personal situation.
Recently we worked with a couple who had an investment property with one bank, and their home with another. In most cases this is the best way to have things set-up, as I’m sure you’re all aware how fond we are here at KPM about the “Split-Banking” strategy for mortgages.
After reviewing the client’s position, we had found out that their interest only period on their Investment Property was due to expire within the next few months, and they also had some equity left in their rental property which they could use to reduce the debt on their home, the numbers looked something like this:
We had recommended that they look at doing two main things to ensure they were set-up appropriately for the future, with their aim to reduce debt on their O/O as fast as possible:
As a result, the client ended up with less debt on their home, better cashflow overall due to the higher proportion of interest only debt (which meant they had more surplus cash to put into the principal of their home) and lastly, they saved over $1k in interest costs by moving banks (breaking and re-fixing) and also had a cash contribution of $4.5k. After deducting solicitors’ fees, the client was about $3k better off financially as well!
These re-structures can be crucial in determining your financial success in the future, and even though you may not immediately be looking at borrowing further funds for another property, or for renovations, etc., it is still worth reviewing your situation.
If you’d like to get in touch to review your own position, please feel free to get in touch at firstname.lastname@example.org