What is equity and how can you use it?

November 22, 2017
Chris Plim

Equity is the current value of your property minus the amount you owe on your mortgage, basically it is how much of your property that you own yourself.

The value of your property is not always the price you paid when you purchased it. Anything from renovating your home to increased demand for real estate in your area can add value to your property and in doing so, will raise your equity.

Here are three different ways of using your equity.

  1. Use your equity to refinance your existing loan to lower your interest rate and make your mortgage repayments more affordable. By doing so, you can pay back your mortgage lender a lot faster, giving you more equity.
  2. Refinance to borrow more money and purchase a larger property. Use your equity as a deposit for a new home loan. Keep in mind that additional expenses, such as stamp duty, need to be considered when you’re estimating your affordability.
  3. Keep your current home and use your equity to purchase an investment property. You won’t necessarily be able to use all your equity as most lenders require you to have a minimum Land to Value Ratio (LVR) to limit financial risk in your mortgage.


Contact Mortgage Choice Lismore on (02) 6684 7096 if you would like to discuss how you can use your equity.

Posted in: Refinancing

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