What is an Equity Loan?

June 16, 2016
Samantha Korzeniewski

Unlocking the power of your home


Equity Loans are usually used when you don’t have access to spare “cash” for fun things like:

  • Renovating your house  
  • Helping you purchase an investment property
  • Going on a long overdue holiday with your family and friends


The way it all works

The Equity you hold in your property is gained by calculating the value over and above the amount you owe (mortgage) on your house. This is also known as the LVR (Loan to Value Ratio)

E.g. Your house is worth $500,000 and you have a mortgage of $300,000 – therefore your potential equity is $200,000. Keeping in mind that most lenders will need to retain 10-20% equity in your property that is untouched, and you meet servicing requirements.

The loan can be structured to suit you with various products like variable, fixed, an increase to your existing loan, or as an separate overdraft where there is a set credit limit for you to use. The term ‘Equity Loan’ can also, sometimes be referred to as a ‘Line of Credit’


How do I find out what the value of my property is?

You may have a good idea yourself, if you constantly watch listings closely on realeastate.com, or follow various ‘Market Specialists’ online with their constant updates (of which can sometimes be a bit conflicting).


You could have a chat with Deslie and request a valuation be completed by a qualified professional (Valuer). You will then have a very clear idea of what is possible for you, and start planning.


Contact Deslie to find out more

07 5549 0800 | deslie.taylor@mortgagechoice.com.au | 0418 715 286

Posted in: Tips

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