Home Loan Refinancing: Make Money to Buy More Property

How to buy more property to generate greater passive income? Home loan refinancing is the answer. It is a good stepping stone to build stronger investment portfolio especially for those who has limited sources of income. It all about Power of Leverage!

For a property investor, the refinancing of a property that is fully or partially repaid, that has appreciated over time is a Property Investor’s Accelerator step as it allows you to release part of the equity tied up in a particular property to be used as seed capital for further investments. Source: W.T. Kam (Founder, Director, Investor Platinum Property Ventures Sdn. Bhd.)

Case Study

Ken Damansara II Condominium @ SS2 Petaling Jaya

• Buying Price = RM260,000 (loan RM234,000, 6.75%, 30 years)
• Current Market Price = RM350,000 (loan RM315,000, 3.55%, 27 years)
• Monthly Payment (original home loan) = RM1,520
• Monthly Payment (after refinancing) = RM1,510
• Condo Rental Price = RM2,200
• Gross Rental Income = RM2,200 – RM1,510 = RM690
• Extra Cash in Hand = RM315,000(new loan) – RM226,000(original outstanding loan) = RM89,000

How long is needed for us to have RM89,000 in savings account? The answer means how much we have shortened the time frame to achieve our financial goal via home loan refinancing.

Power of Leverage in Property Investment

‘Power of Leverage’ is the most fantastic reason why I’m impressed with the idea of making money from property investment. In Malaysia, you are required to pay only 10% down payment and banks are always more than happy to offer you the balance of 90% loan.

Just imagine, you pay only RM20,000 as down payment for a property worth RM200,000. Assuming the property price appreciates over the time (in fact, it happens most of the time), then you may refinance it to get more money for further investments.

Don’t you think that it is a great investment in property?

Related Articles:  Top-up Home Loan: Make Money to Buy More Rental Property