Equity: It’s what you’ve got and the way you use it.

October 26, 2016
Emma Kennedy

You have probably heard of people talking about accessing their equity in their home. Commonly used for things such as purchasing investment properties, renovations or funding large one off expenses, using home equity is a growing trend among home owners, but what exactly is it?


Put simply, home equity is the difference between your property’s current market value and the remaining mortgage still to be paid. For example, if your home is worth $500,000 and there is $200,000 remaining on the loan, your equity is at $300,000. Keeping in mind, you will not have access to the whole amount, with lenders generally only allowing you to borrow up to 80% of the property’s value without being charged Lender’s Mortgage Insurance (LMI).


Home equity grows on its own

One of the best aspects of home equity, is the ease in which it is accumulated. Generally speaking, most properties increase in value over the long term, and paired with a home owner who is making regular repayments on their loan, the value of the mortgage steadily decreases.

As time goes by, the difference between the property’s value and the loan will represent your increasing equity.


The opportunities are endless

One of the most popular uses of equity these days, is using it as a deposit for an investment property. If you are wanting to get into the property market, it can be difficult to find the extra money to put away for a deposit. By using your equity, it takes away the struggle of finding the extra money as the money is accumulated with what you’ve already paid.

Equity is also a great option of funding large one off purchases; a new car, home renovations, overseas holidays or even a wedding! It is just like taking out a personal loan, but with the benefit of the lower home loan interest rates, which make it a very affordable source of funding.


Access your equity with ease

These days, accessing your equity is as simple as refinancing your current home loan to get the available funds. Our brokers at Mortgage Choice Unley are experts in refinancing and how to best go about accessing your equity, as every home loan is unique. Why not give us a call on 8273 7970 and find out how you can unlock your equity.

Posted in: Refinancing

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