Any investor worth their salt knows what their investment property is worth, as well as what rental return they are achieving. Unfortunately for some, there’s an important area within their portfolio (particularly when there is more than one property) which is often neglected, and that is their interest rate and managing the cost of funds.
The average Big 4 Bank variable interest rate for investors is 4.48% vs the current lowest investor rate of 3.99% – that’s a potential saving of $82,537 over the term. What if I told you I could save you $82,537 in costs and it would cost you less than a dinner for two at a restaurant? IN a recent poll 63% of NSW and WA mortgage holders had never changed lenders.
If those investors all made the switch to a better deal then three important things would happen to their investment
1. Yield would increase
2. They will save interest on their loan
3. They will free up more capital to spend on other investments, thus accelerating wealth creation
In my opinion, they are all compelling reasons to be pro active. After all, isn’t the whole point of investing about making a return, so why not make a better one?
Why not delegate the task?
Something that we introduced 5 years ago to Pure Finance customers was the annual review which is where we negotiate with our clients lender on the customers behalf every year. For a busy investor with a family, this is well received because it’s one less thing to worry about. We believe that this kind of active management of investor debt has a compounding effect over the term, with huge upsides and savings.