How can I take advantage of the equity in my home?

JUNE 10, 2021

With Australian real estate enjoying its most substantial returns in decades, you might find yourself in a position where you are looking to invest in more property, renovating an existing property or help your family into homeownership. 

Once you’ve taken this decision, you’re going to need to fund your next move somehow. Using the extra value (or “equity”) in your family home is often a sensible method for financing your next property venture.

What is equity?

The equity in your home is the market value of your property, less the balance owing on the mortgage. Let’s say your property is worth $950,000, and you have $200,000 principal left to pay on it. That means you have $750,000 in equity. This also gives you a Loan to Value Ratio (LVR) of only 21%, which will provide you with plenty of support for a new purchase potentially without paying Lenders Mortgage Insurance. 

The truth is that if you continue to pay off your mortgage and purchase an investment property, you can continue to build equity. Moreover, with interest rates so low, it’s never been more affordable to become an investor. 

The advantages of building more equity include cheaper rates either with your current lender or with a new one. Besides, by refinancing with the help of a financial specialist such as Our Broker, the new lender may even offer you a rebate of $3,000 to help offset any break costs. 

Develop equity for your family’s financial future

For parents with a first-time buyer under the roof, you can use your additional equity in your family home or investment property to help your children start their real estate ownership journey. It’s genuinely satisfying knowing you can help your children secure the pleasure and stability of homeownership. Better still, you can talk to Our Broker, who have access to lenders with limited liability family pledge loans. 

More equity can also enable you to refinance your current home loan to invest in a rental property. If you buy a quality, well-located property, you’ll usually enjoy capital growth, while the tenants can help you pay off your mortgage or provide you with funds to invest further.

If you plan to renovate your home, accessing your equity could help turn these goals into a reality sooner. When appropriately done, renovations can substantially increase the value of your property and help maximise its resale value. 

To find more about accessing the equity in your home, contact Our Broker today on 1800 913 677.