Hello!

Join Login

Article Are you sitting on a gold mine?

By

31 Comment

If you have been a homeowner for a few years, chances are the value of your property has risen whilst your mortgage has reduced. This equity in your home is a potential gold mine.

Have you ever thought about how you can make the equity in your home work harder for you?

How you ask? It’s easy! The strategy is called debt recycling.

Agreed, the strategy is not for everyone, but in the right circumstances it can considerably increase your wealth over the long term by increasing your exposure to growth assets and of course the income those assets create.

Many people have taken this opportunity but before you jump into the strategy, answer the following questions:

  1. Do have at least a ten-year time horizon?
  2. Can you manage your debt and resist the temptation of easy access to cash?
  3. Does the household have a stable income to maintain a secure financial position?
  4. Are you willing to invest in growth assets that may fluctuate in value over the short term?

If you answered “YES” to them a debt recycling strategy may just be right for you.

A gearing strategy is not for short-term speculation but can be an effective one for long-term investment in quality growth assets.

Advantages of a home equity loan include:

  • A simpler application process.
  • Lower interest rates than on other loans.
  • Interest costs for investment purposes are tax deductible.
  • Higher loan-to-value ratio than margin loans and no margin calls!

Of course, the key question is what sort of investment to make with your borrowed funds? There are costs associated with borrowing so over the long term the return from the investments must be greater than these costs.

Is this is the right strategy to accelerate your financial position? Talk to a Financial Advisor today about the most ideal financial journey for you.

Modoras Pty Ltd ABN 86068034908 AFS License No. 233209. This article contains general advice information only and is not intended to represent specific personal advice. No individual personal circumstances have been taken into consideration for the preparation of this material. It is recommended that you obtain your own personal professional financial advice before making any financial investment decision.

Share this

Comments

  • Thanks for your advice. I certainly can answer yes to those questions. I think its time I speak to a financial adviser

    Reply

  • An interesting concept and well worth considering.

    Reply

  • Informative and interesting article, but we are happy with the way we are.

    Reply

  • Good advice. Thanks for sharing.

    Reply

  • Interesting read, hope I can use it one day.

    Reply

  • Often wondered about gearing and buying an investment property. Its step you have to be ready to take as a higher level of debt can be stressful.

    • I can definitely appreciate where you’re coming from. Gearing can be stressful at times but with the right advice and people to help you out every step of the way, it shouldn’t 🙂 More than happy to help if this is something you’re looking at doing in the future! Katerina x

    Reply

  • Different financial products and the strategies for successfully using them can be incredibly confusing. With so much conflicting information available, it’s hard to know who to trust. It’s good that this advice is provided by a Mum who lives in the “real” world, and can explain things so they’re easier to understand.

    • Thank you for your kind words 🙂 I’m a mom first before a Professional Financial Planner and I can I definitely empathize with all the other moms out there who has yet dipped their toes in investment strategies as I was there once, years and years ago… After 15 years in the industry, I have acquired many years of experience in the field. This expertise is what I use to help other moms and their family when it comes to building their wealth and helping them reach their full financial potential! Happy to help when I can 🙂 Feel free to email me at katerina.sousalis@modoras.com

    Reply

  • Informative article thanks for sharing

    Reply
Post a comment

To post a review/comment please join us or login so we can allocate your points.

Join Login

↥ Back to top

Thanks For Your Star Rating!

Would you like to add a written rating or just a star rating?

Write A Rating Just A Star Rating
Join