How to use the value in your own home to purchase an investment property now
Author: Jeff Sawtell
In my last article (read it here) I shared my personal story and the ‘Aha’ moment that completely changed the way I thought about wealth creation. I also outlined the simple strategy I was able to utilise to grow my wealth and fund the purchase of my first investment property without having to put up any of my own savings.
Since achieving personal success with this strategy – which revolves around utilising other people’s money to grow your own wealth (in this case, the bank’s money) - I’ve gone on to help countless clients replicate my results by implementing the exact same strategy.
The clients I have helped are people who have a vision of what they want their lifestyle to look like, have considered the amount of wealth they need to support that lifestyle, and are prepared to act. It seems crazy to me that despite the ease with which you can utilise this strategy for enormous personal benefit, the requirement to act stops so many from ever moving off the starting line.
What I have come to realise however, is that until we properly understand something, are aware of the results it could produce and are able to link ‘action’ with future benefits, we won’t have sufficient motivation to act.
In order to help anyone who may be considering utilising value in their property for a future purchase, I wanted to share with you the ‘what, how and why’ of the strategy with a real-life case study - outlining how clients Matt and Kristy recently utilised the strategy to purchase their first investment property.
The Strategy Explained:
‘What’
Utilise the value in your own home, also known as equity, to purchase an investment property which will grow in value over time and create future wealth and income.
What is equity? Equity is the difference between the current value of your home and the current balance of your mortgage.
‘How’
Subject to meeting certain criteria through a simple loan application process, many banks allow homeowners to utilise the equity in an existing property to secure an investment loan which they can then use to purchase another asset, e.g. property.
‘Why’
Utilising equity in lieu of cash allows homeowners to fast track their next investment. Instead of waiting years until it’s possible to save up enough cash for a deposit, watching property prices rise in the meantime, people who meet the bank’s lending criteria can invest today.
Case Study:
Clients: Matt & Kristy
Location: Newcastle NSW
Strategy: Utilise equity in their own home to purchase an investment property
Objective: Build wealth without needing to wait to save up a deposit
Initially Matt and Kristy were looking at refinancing their home loan to a better interest rate, but after chatting Matt and Kristy mentioned they aspired to build a property portfolio in the future.
What Matt and Kristy didn’t realise was that they were already able to begin building their portfolio now. After running through our simple process together, I was able to show them how they could utilise $250,000 of equity in their home to help fund the purchase of their first investment property.
Ecstatic with the result, Matt and Kristy were not only able to reduce the interest rate on their existing home loan but were also able to purchase an investment property in Newcastle worth $600,000 and generate rental income to assist with loan repayments. The best part? They did so without using any of their own savings.
If you too are interested in utilising the same investment strategy that Matt and Kristy successfully implemented to fast track their wealth creation, the experienced team at Fortuity Lending can show you how. Book here or call to make an enquiry.