HOW TO USE YOUR EQUITY TO RENOVATE OR INVEST
7 in 10 homeowners have utilized the equity in their property to renovate, invest in real estate or shares, or increase their superannuation.
Have you considered how you might make use of last year’s home price rise?
Have you heard that property prices have increased by 23.7% in 2021? That’s a big leap! So, how can you take use of this increase without (or before) selling your home?
One strategy is to cash out equity while property values are high (which we’ll go through in further detail below).
According to NAB research, three in ten mortgage holders have recently done just that and renovated their house with the cash.
Other popular choices include purchasing an investment property (16% of homeowners), buying stocks (12 percent), and increasing super accounts (8%).
How do you ‘cash out’ equity?
It may seem difficult – but we assure you that it isn’t.
Let’s assume you bought an $800,000 house three years ago and now it’s worth $1 million due to last year’s property price increase.
Now, let’s also assume you took out a $600,000 loan to buy that house and have been able to pay down $500,000 of it.
By refinancing a $500,000 loan into a $700,000 loan (70% of the value of your home), you may access $200,000 in equity to help pay for renovations or purchase an investment property.
It’s also worth noting that banks will generally allow you to borrow up to 80% of the market value of a property.
If you refinanced your mortgage to an $800,000 loan, you’d be able to access $300,000 in equity.
Want to learn more how to unlock your equity?
If you’re still unclear about it all, don’t worry because we’ll happily sit down with you and figure out how much equity you may unlock.
The good news is that you may save money by refinancing your mortgage. If you decide to go ahead, part of the process may be to refinance your home loan.
Is this a good thing?
If interest rates rise, it does not mean you can’t find a better mortgage deal. While competition among lenders is still fierce, particularly if you have significant equity and a good track record of paying off your mortgage on time, the situation has tightened considerably.
If you’re looking for an experienced team to unlock your equity, then look no further. We’ve been helping people for the past 12 years with their refinancing needs, so if you’d like to crunch the numbers and explore your possibilities, get in touch now – we’d be delighted to assist.
Mortgage Broker - Frankston, VIC
Will Bell has 15 years’ experience in the finance industry, the last 11 years he has owned and operated Will Bell Mortgage Broker. He specializes in residential home loans and over the years has carved out a trusted brand. This is proven by the reviews his customers have made regarding the service and the experience he has provided.
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