The cash locked in properties can be placed into better use by investing, getting insurance plans or even retirement planning.
What is Cash-out Financing?
Cash-Out Refinancing helps to unlock the capital tied to your property, without selling your property. But, it also places the property as collateral when you choose to do Cash-out Refinancing. People tend to draw out the money when they are in need of cash to do business or investment. Alternatively, others choose to draw out the money to put the locked up cash to better use.
How does Cash-Out Refinancing work?
Generally, you can borrow 60% to 80% of the market value of your property from banks. The percentage depends on how many mortgages you have and the amount of CPF used to purchase the property.
Benefits of Cash-out Financing
1. Low interest rates
Firstly, it is much cheaper compared to many other loans such as personal loans which starts at 4%.
2. Alternative way to get cash from your property
Next, it is another way to unlock the capital in your property rather than selling or renting it.
Cons of Cash-out Financing
1. The property will be under collateral
It is important to not miss any payments or it can result in you losing your property.
To conclude, it is important that the sum from Cash-Out Refinancing is used correctly, such as businesses or safe investments.
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