Brace for impact, an equity release can be your investment lifeline in a global recession
Borrowing rates are increasing significantly, UAE property prices are hovering at all-time highs, and an extended global recession is predicted to be imminent. With all these conditions brewing the UAE housing market is primed for a dip in property prices. So as a property owner, you have the unique chance of cashing out on your owned properties with high equity releases that you can leverage to fund new investments. Let’s explore the advantages of refinancing strategies for this high-interest, high property value window.
Don’t snooze, start the equity release process and get your property valuation done before the price dip
Property values have been on an upswing since the beginning of 2021 and prices are peaking right now, this means you can get a higher valuation for your property. However, the existing market conditions are applying downward pressure on property prices, making this final quarter of 2022 the most probable trigger month of the downward property price spiral. So, if you are considering a refinancing option, start your paperwork now, and get the valuation out of the way as soon as possible to get the highest valuation possible for your property.
Also, property owners who were overexposed for years (loan value exceeds property value) would be crossing over to a net positive, thus making good refinancing options possible for historically overexposed properties. Simply, you have access to more funds, and your net positive may not last long, so onward with valuations ASAP.
Ride the property wave, stagger your financial instruments
In the short run, an equity release will allow you to be cash flush to pounce on investment opportunities and if you are considering reinvesting in real estate, the end of the 4th quarter of 2022 will be an ideal time to scoop up properties. However, always keep in mind that higher interest rates will ease up in 2 to 3 years, so plan for a buyout option in the medium run, i.e. in the long run a staggered refinancing strategy of an equity release now followed by a buyout in 2 to 3 years will place you in a financial path to minimize risks, maximize capitalization and profits.
Rental income remains king
As an alternative investment strategy, UAE rental properties have remained a solid option. Rental income has remained vital for all segments, however, during and post-pandemic we have seen an influx of HNW(high net worth individuals) and affluent individuals putting roots down in Dubai, this has resulted in a higher demand for 2 to 3-bedroom villas and apartments pulling this segment’s property values and rental prices up. So if you plan to invest back in real estate, the forecast remains positive for 2 to 3-bedroom units more than single and studio units. It may be time to consider multiple unit investments.
More bang for your buck for renovations
The current global economy is reeling from supply-side issues created by the pandemic and exacerbated by the situation in Ukraine. The construction supplies industry is facing a significant shortage in construction materials driving prices up day by day. This means the phrase “it’s always cheaper to build now” is more relevant than ever. As a property owner, you may be dreaming of the perfect Italian kitchen, a relaxing pool, an oasis of a bathroom, or simply renovating commercial properties. In this case, you can again use an equity release to upgrade and add more value to your properties, which will be cheaper now than in the future, i.e. more bang for your buck.
Common Pitfalls of Refinancing, how we help you avoid them
As great as refinancing your property may sound, timing and organizing a profitable buyout or an equity release may be tricky, in addition, it can be a time-consuming process. FCMB offers a specialized set of services crafted for achieving profitable and equitable outcomes for individuals thinking about refinancing. Let’s take a look at how we help you safeguard yourself and set up the best refinancing deal.
Minimize refinancing costs and fees
Anytime a mortgage refinancing is done processing/pre-payment fees are incurred, we keep a keen eye on these costs to make sure you come out ahead when the deal is done.
Search for the lowest rates
Our team always keeps an ear to the ground for the best rates in the market. We evaluate your requirements to match you with the best rates on offer. You can check below for the best rates on offer right now. (Rates are updated daily)
If your loan value exceeds the value of assets, you may run the risk of overexposure. We help you avoid overexposure to help you maintain a profitable financial portfolio.
Assist in obtaining market valuations for properties
Without knowing the value of a property it is hard to plan a refinancing application. We assist in accessing bank empaneled valuators to estimate property values to optimize your refinancing deal.
Assist in finding qualified contractors and estimating construction costs
We assist our clients eyeing renovations to get in touch with qualified contractors to estimate costs and complete construction requirements.
Always by your side from start to finish
Refinancing as with any financial service comes with completing forms, providing supplementary documents, and following procedures. We help our clients through the entire process from start to finish helping to save time and avoid the undue hassle.
About the Author
This blog post was authored by FCMB Team & Zamran Zaharan.