As a painter, you've likely built up solid equity in your home over the years. But did you know that releasing equity in your property could be the key to expanding your painting business? Whether you're looking to buy new equipment, hire additional staff, or even purchase commercial property, refinancing can help you access the funds you need.
Understanding Equity and How It Works
Equity is the difference between what your property is worth and what you owe on your mortgage. For example, if your home is valued at $600,000 and you owe $350,000, you have $250,000 in equity. Through refinancing, you can potentially access up to 80% of your property's value, minus what you currently owe.
When you work with finance and mortgage brokers who understand the trades industry, they can help you:
• Access loan options from banks and lenders across Australia
• Find suitable interest rate options for your financial situation
• Determine the right loan amount for your business needs
• Navigate the application process with lenders familiar with tradie income patterns
Why Painters Choose to Refinance for Business Growth
Many painters find themselves in situations where traditional business loans aren't quite right for their needs. Here's where refinancing becomes valuable:
Equipment and Vehicle Purchases
New spray equipment, ladders, or work vehicles can be expensive. Rather than taking out separate equipment finance with higher rates, accessing equity often provides a lower interest rate solution.
Business Expansion
Whether you're looking to hire apprentices, expand your service area, or take on larger commercial projects, having access to capital gives you the flexibility to grow when opportunities arise.
Debt Consolidation
If you have multiple business debts or credit cards, you might choose to consolidate debts into your home loan, potentially reducing your overall repayments.
Refinancing Options to Consider
When exploring refinancing to access equity, you'll encounter different loan structures:
Variable Interest Rate Loans
These loans fluctuate with market conditions. While rates can go up or down, they often start lower than fixed rates and offer more flexibility with additional repayments.
Fixed Interest Rate Loans
With a fixed rate period ending typically after 1-5 years, these loans provide certainty over your repayments during that time. This can help with business budgeting and cash flow planning.
Split Loans
Some borrowers choose a combination, keeping part of their loan on a variable rate while fixing a portion for stability.
The Application Process for Tradies
Working with mortgage brokers who specialise in the trades industry means they understand the unique aspects of painter income:
- Income Assessment: They know how to present tradie income to lenders, including seasonal variations and cash components
- Bank Statements: Lenders will review your bank statements, but experienced brokers can help explain any irregularities common in trade businesses
- Eligibility Checks: They can check eligibility for special lender policies designed for self-employed tradies
- Documentation: A streamlined application process that accounts for the documentation tradies typically have available
Loan Terms and Repayment Options
Refinancing gives you the opportunity to change your loan term. You might:
• Extend the loan term to reduce loan repayments and improve cash flow
• Maintain your current term but access additional funds for business use
• Reduce your term if your business income has improved and you want to pay off the loan sooner
Using Equity for Investment Properties
Some painters look at release equity to buy the next property as an investment strategy. This could be:
• A residential investment property for long-term wealth building
• Commercial property for your business operations
• A property to renovate and sell, using your painting skills to add value
Interest Rates and Market Timing
Refinance interest rates vary between lenders and loan products. Mortgage brokers can help you compare:
• Standard variable rates vs low-doc options
• Interest-only periods if you're investing the funds
• Offset account facilities to reduce interest on surplus business funds
• Redraw facilities for ongoing access to additional funds
Making the Right Choice for Your Business
Accessing equity through refinancing isn't right for everyone. Consider:
• Your current financial situation and ability to service a larger loan
• Whether accessing a lower interest rate compared to other funding options makes sense
• Your long-term business and personal financial goals
• The costs involved in refinancing vs the benefits gained
Better loan options exist when you work with brokers who understand that painter income can be variable and seasonal. They can present your application in the right light to lenders who are comfortable with trade businesses.
If you're ready to explore how refinancing could help fund your painting business expansion, don't go it alone. Working with specialists who understand the trades industry can make all the difference in finding the right loan structure and lender for your situation.
Call one of our team or book an appointment at a time that works for you.
