I usually get asked questions like, how to pay off your mortgage sooner? How do you grow your property portfolio? How do you invest more? Why are you so cool…only joking no one ever asks that last question.

The reality is that most of the answers to the above questions come from owning a property and using your equity.

You see most people buy a property to live in and see it as their home. Because it’s their home, they want to protect it, so their priority is to pay off the mortgage as soon as possible putting more of their after-tax income onto their loan.

Once the mortgage is paid off and you hold the title deeds in your hands, the property is now protected and no one can take that away from you, not even the bank.

What if I told you there are easier ways to pay off your mortgage? One option is buying and holding onto an investment property, wait for it grow in value and then using the profits to pay down your home mortgage. Easy right?, and what if I told you that someone else will be paying the mortgage on the investment property while you hold onto it? Even better right? And then as if that’s not enough, what if the government helped you with tax benefits while holding that investment property?

But, where do you get the money to invest if you’re putting all your savings into your home loan?

You access the equity in your home.

You see, when you access the equity in your home to invest in property, you expand your asset base. Expanding your asset base means a 7% growth rate against 2 properties is rather than just one property. So if you owned a property worth $800,000 and purchased another property worth $500,000, your asset base would become $1,300,000 (no matter what the mortgages balances are). You are now benefitting from $1,300,000 growing at 7% rather than just $800,000 growing at 7%.

Below is a simple table to show you the calculations

What’s my equity position I hear you ask. The first step to working this out is to carry out a bank valuation on your property. If this is something you want to explore, book in a call with us through our contacts page.

“Between calculated risk and reckless decision-making lies the dividing line between profit and loss.” – Charles Dughigg

Thank you for reading.