This week, we’re delving into a topic that’s on the minds of many investors: how to offset the impact of higher interest rates. I will be sharing the top four tips to help you navigate this challenge. Let’s dive in!
Tip #1: Consider an Interest-Only Loan
One of the first strategies to explore is switching to an interest-only loan. Many lenders offer the choice between principal and interest or interest-only loans.
The beauty of opting for interest-only is that the interest portion is typically tax-deductible for investment properties, while the principal portion isn’t.
This can help minimize your immediate outgoings, allowing you to manage your cash flow more effectively. Remember, you can still increase your monthly payments if you wish to pay off the principal sooner, giving you flexibility.
Tip #2: Increase Your Deposit
Boosting your deposit can be a game-changer. While banks often lend up to 90% of a property’s value, having a larger deposit reduces the size of your loan, lowering your monthly payments and easing your cash flow.
So, if you have the means, consider putting down a larger deposit to secure these benefits.
Tip #3: Negotiate with Your Lender
Banks are becoming increasingly competitive in today’s market. If you already have an existing loan for an investment property, I recommend contacting your lender.
Before doing so, do your research and find out what other banks are offering with comparable terms.
Armed with this information, approach your lender, and inquire about the possibility of a reduced interest rate.
Remember, it never hurts to ask, and many banks are willing to accommodate loyal clients to retain their business.
Tip #4: Invest in Higher Rental Income Properties
Consider diversifying your investment portfolio with properties that offer higher rental income.
These properties yield greater rental income compared to the expenses associated with them.
In the current market, investors are increasingly focusing on positive cash-flowing properties, especially with interest rates hovering around 6%.
Traditional homes or apartments may not provide the high yields you’re looking for, so explore options that cater to this demand.
By implementing these tips, you can better navigate the challenges posed by higher interest rates and ensure your investments remain financially viable.
Would you like to discuss these strategies further or explore tailored solutions for your specific situation?
I invite you to book a strategy call with me by clicking here. We can delve deeper into your investment goals and create a plan to secure your financial future.
Best regards,
Geoff Tomkins
Buyers Advocate
PH: 0404 852 781
