If you own your home, you may have built up equity — and you can use it to borrow money for things like renovations, investments, or other goals.
Equity is the value within your property then can be accessed by a lender and can be used for a number of reasons. Quite often this equity can be accessed to help purchase another property, and if you have enough equity available could mean you can purchase a further property without the need of any savings.
Using the equity in your home is an effective method for purchasing another property or funding renovations. Refinancing is one of the common ways to tap into your home equity.
An equity loan allows you to borrow against the equity you’ve built up in your home. You can utilise your home equity in place of a cash deposit when buying an investment property. Loans for investment properties frequently rely on leveraging home equity. The amount of equity you can use varies from one lender to another.
Calculate the available equity in your property by taking the estimated market value of your home often determined by comparing sales of similar homes in your area or an appraisal from a real estate agent and subtracting the balance of any existing loans secured against your property.
Figure out how much money you really need to reach your goals. You don’t have to (and maybe shouldn’t) use all the equity you have. What matters most is how much you can afford to repay. For example, if you’ve got $150,000 in equity but can only manage repayments on $50,000, then stick with $50,000 not the full amount. Keep in mind of you are borrowing more then 80% of the property value, you may now incur further mortgage insurance. Talk to a team member today to see if this is applicable for you.
At this stage, it’s advisable to begin exploring and evaluating your home loan options with a JDL Finance broker. This moment also presents a good opportunity for your broker to conduct a “Financial Wealth Check” on your existing home loan.
The type of product you select and the amount of equity you wish to use can lead to different fees and costs. For instance, accessing more than 80 percent of your property’s value typically requires paying Lenders’ Mortgage Insurance (LMI).
If you’ve been a homeowner for several years, it’s likely that you’ve accumulated a significant amount of equity, which can be a valuable asset for property investment. We can assist you in determining the amount of equity you have in your home and explore how you can leverage it to acquire an investment property sooner. Watch our brief video to learn more.
Home Loan Education
