Equity explained by our home loan expert
Refinancing is often a tactic used to free up the equity you have in your current home in order to fund purchases or lifestyle goals.
Our home loan expert explains the term 'home equity' and how it can be accessed and outlines ways in which it may be used.
Buying an investment property with home equity
Accessing equity in your home is a great strategy to buy another property or renovating. One of the popular ways to access your home equity is to refinance.
- An equity loan lets you borrow against the equity in your home
- Your home equity can be used instead of a cash deposit to buy an investment property
- Investment property loans are often structured around using home equity
- How much equity you can use will vary between lenders.
Steps to access equity
Unlocking equity to invest
If you’ve owned your home for a few years, there’s a good chance you’ve built up some reasonable equity, and this can be a valuable resource when it comes to property investment.
We can help you to find out how much equity you have in your home, and how you might be able to use it to own an investment property sooner. Watch this quick video to find out more.
Property investor guide
Our free, downloadable guide explains the costs and steps associated with the purchase of an investment property, positive/negative gearing as well as pros and cons of houses vs. units.
Important things to consider when using equity to invest
Many property investment gurus say it’s important to repay the loan on your home as soon as you can. The equity that is drawn down from your home to purchase an investment is tax effective, but any remaining debt on your home isn’t. Therefore the loan on your home costs you much more on an ongoing basis than the loan on your investment property.
The property that you live in is not the only source of home equity. You can also use the equity in an existing investment property to help fund the purchase of another investment property.
Your Mortgage Choice broker can help you to work out how much equity you have in your property and how it can be accessed to fund your investment.