Guide to Refinancing Your Investment Property Loan

As a pharmacy assistant building your property portfolio, understanding when and why to refinance your investment property can help you save thousands of dollars and accelerate your wealth creation strategy. Mortgage refinancing involves switching your existing home loan to a new loan, either with your current lender or a different one, to access better features, lower interest rates, or release equity.

Why Refinance Your Investment Property?

Many property investors refinance to improve their financial position. Here are the main reasons to consider refinancing your investment loan:

• Access a lower interest rate: If interest rates have decreased since you took out your original loan, you could potentially access a better interest rate and save money refinancing
• Release equity to buy the next property: Accessing equity in your existing investment property allows you to fund additional property purchases without saving another deposit
• Consolidate debt into your mortgage: Combining personal loans or credit card debt into your mortgage may reduce your overall loan costs
• Switch between fixed and variable interest rates: Move from variable to fixed to lock in a rate, or switch to variable for flexibility
• Access improved loan features: Upgrade to a loan with an offset account or redraw facility to improve your cashflow management

When Should You Consider Refinancing?

Timing matters when refinancing your investment property. Consider these situations:

Fixed Rate Period Ending: If you're coming off a fixed rate, now is the ideal time to review your options. Many borrowers who took out fixed rate loans when rates were lower are now stuck on high rates as their fixed rate expiry approaches. A loan health check can reveal whether you're paying too much interest.

Property Values Have Increased: If your investment property has increased in value, you may be able to unlock equity without needing to provide additional security. This equity release can fund your next investment purchase or property renovations.

Life Circumstances Have Changed: Perhaps your income has increased since working as a pharmacy assistant, or you've taken on additional responsibilities. These changes might qualify you for a larger loan amount or more favourable loan terms.

The Refinance Process for Investment Properties

Understanding the refinance process helps you prepare for what's ahead:

1. Loan Review: Assess your current loan terms, interest rate, and remaining loan amount
2. Compare Refinance Rates: Research current refinance rates and loan features available in the market
3. Property Valuation: Your lender will arrange a property valuation to determine current equity
4. Refinance Application: Submit your application with required documentation including rental income evidence
5. Settlement: Once approved, your new loan settles and replaces your existing mortgage

The entire refinance application process typically takes 4-6 weeks, though this can vary depending on your circumstances and lender requirements.

Accessing Equity for Your Next Investment

One of the most powerful reasons to refinance is accessing equity in your property. As a pharmacy assistant building wealth through property investment, using a cash out refinance strategy allows you to leverage your existing property's growth.

For example, if your investment property was purchased for $500,000 and is now valued at $650,000, you may be able to access up to 80% of the property's value (minus your existing loan). This released equity can become the deposit for buying your first investment property or expanding your property portfolio.

Fixed vs Variable: Making the Switch

Deciding whether to switch to variable or switch to fixed depends on your investment strategy and risk tolerance:

Variable Interest Rate Benefits:

• Flexibility to make extra repayments without penalty
• Ability to access offset accounts and redraw facilities
• Potential to benefit if interest rates decrease

Fixed Interest Rate Benefits:

• Certainty of repayments for budgeting purposes
• Protection if interest rates increase
• Peace of mind with predictable costs

Many investors choose a split loan, combining both fixed and variable portions to balance security with flexibility.

Key Features to Look for When Refinancing

When comparing refinance options for your investment property, consider these valuable features:

• Offset Account: A refinance offset account linked to your investment loan can reduce the interest you pay while keeping funds accessible
• Redraw Facility: A refinance redraw option allows you to access extra repayments you've made
• Interest-Only Options: Many investors prefer interest-only loans to maximise tax deductions and improve cashflow
• Portability: The ability to move your mortgage to a different property without refinancing again

Common Mistakes to Avoid

When refinancing your investment property, watch out for these pitfalls:

• Focusing solely on the interest rate while ignoring fees and features
• Not considering break costs if you're coming off a fixed rate early
• Failing to factor in the tax implications of releasing equity
• Rushing the refinance process without proper comparison
• Not obtaining professional advice about your specific circumstances

How Pharmacist Home Loans Can Help

At Pharmacist Home Loans, we understand the unique financial position of pharmacy professionals. Our experience with investment loan refinancing for pharmacists means we know which lenders offer favourable terms to pharmacy assistants and other pharmacy professionals.

We can help you:

• Conduct a comprehensive home loan health check on your investment property
• Compare current refinance rates across multiple lenders
• Structure your refinance to optimise tax benefits
• Access equity for your next property purchase
• Find solutions for those with fixed rate expiry concerns

Whether you're looking to reduce your interest rate, access equity, or improve your loan features, refinancing your investment property could save you thousands of dollars over the life of your loan.

Ready to explore your refinancing options? Call one of our team or book an appointment at a time that works for you. We'll review your current situation and help you determine whether refinancing your investment property makes financial sense for your wealth-building goals.