This is an uncertain time on a number of levels. After the coronavirus pandemic, the world market is in shambles. The global economy is in freefall. As more and more countries initiate lockdown procedures to contain this potentially deadly virus, the impact on the economy is bound to be devastating. Many readers have felt the economic impact when they carried out independent isolation. They may be self-employed or freelancers whose income has dried up as their clients self-isolate. They may have been placed on furlough with reduced pay. Or they may be amongst the unlucky ones whose employers simply let them go to protect their profits.
Sadly the economic impact of the coronavirus likely to have serious and far-reaching consequences for all of us. Even if we are lucky enough to avoid contact with the virus itself. However, while the pandemic may be a source of panic for many, there’s still a glimmer of light silver coating in this storm cloud for those with real estate. Here we’ll look at some excellent news for property owners in these dangerous and unsure times.
Urgency: Even if you are short on capital right now, resist the urge to panic sell
Your home, or your investment property, is your greatest source of capital, and in a period of global panic, it may be tempting to panic-sell your property. However, we strongly recommend against this. Selling now will see you turn sub-optimal profits or become negative equity at worst. Of course, the urge to panic is understandable, particularly if you haven’t any income. However if you need to sell assets, we recommend selling items from around the house such as precious metals, wine or other commodities before selling your property. The same even goes for you share.
Here’s the reason…
Holiday mortgage payments can make financial planning a lot easier
If you are worried about making ends meet for your next mortgage payment on your home or investment property, it may be worth talking to your bank about potential mortgage payment holidays. This can offer you time to get your house in order financially and look for new income opportunities or cash in on other assets around your house or in your portfolio.
If you own a rental property, your tenants may struggle to come up with this month’s rent. Yours property management the company will let you know if it is the case. You can pass the savings from paid vacations onto your renters and reduce the risk of them jumping ship when all of this is over. Moreover, large tenants are hard to find. You want to keep it so long as possible.
Low interest rates around the clock can save you quite a lot of money
Interest rates for mortgages are currently at historic lows. At the time of writing, interest rates for 15-year mortgages hover around the high 2% while 30-year mortgages hover around the low 3%. This has prompted a big spike in refinancing apps. If you like the idea of saving in this time of global crisis, you should certainly consider refinancing. It’s important to be proactive and take advantage of these savings now. Switching to a lower interest product with a locked rate can save you quite a bit on interest. Let’s face it, the more equity you can get in your property, the better, and you will probably reap the rewards of sticking with your property through this turbulent time.
While refinancing can be a disruptive experience and come with an up-front fee (an estimated feed between $1,500 and $5,000) it can mean that extra money goes to your property holdings and fewer money goes to the bank.
And you know what that means…
You can pay off your mortgage faster
No matter how old you are and how many years of work you have left in the tank, paying off your home loan faster is excellent news for the future. Yes, you may find yourself with barely higher mortgage payments. Yes, it may put a strain on your cash flow and keep you digging into your savings/overdraft for a while. But today’s sacrifices could pay off tomorrow, freeing you from mortgage debt more quickly and potentially even supplying you with the chance to retire earlier.
So while there may be storm clouds on the horizon for some time, their silver linings could benefit you for years to come.
