When will the Reserve Bank of Australia stop? In August, the RBA cut the official cash rate to 1.5 per cent, the lowest it has ever been. Banks were quick to pass on the rate cut in their home loans – although not all the way, we’ve noticed.
Regardless, home loan interest rates are now also back to near-record lows. Does that mean you should be looking at expanding beyond your current strata ownership?
Using your leverage
Over the year to the end of July, the median Sydney unit value increased by 9.41 per cent. This comes from CoreLogic RP Data, which notes that this growth is even better than the same figure for houses (a round 9 per cent).
If you bought into strata worth $400,000 a year ago, this means you might have a further $40,000 of equity in the property without even lifting a finger. Couple that with your home loan repayments, and you have some significant chips to play with.
With interest rates sitting so low thanks to the Reserve Bank, it might be worth looking at your current strata and leveraging its equity to buy into another piece of real estate. The longer you have been an owner, the more you are likely to have.
It could be another residential property, or perhaps a commercial investment – it’s up to you. Leveraging is a popular method among investors, allowing them to quickly build a portfolio, boosting capital gains and positive cashflow.
Everyone’s financial strategy is different, and you may be happy with yours currently. If you do want to look into how this process works and whether your strata is going to be a key part of buying your next property, make sure to get in touch with team at Civium Strata.