Search

How to Access Home Equity


You make your mortgage payment on time. Good news: you’ve probably accrued some equity. That’s the difference, in dollars, between how much you owe (your home loan) and how much your home is worth. So, if you’ve paid down your loan to $250,000 and your home is worth $550,000, that’s $300,000 in money that’s yours – not the bank’s.


How can you access the equity in your house and put it to good use? Let’s find out.


1. Find out how much equity you have.


This is a pretty important step. First, you’ll need to have a property valuation done. A valuer will come to your home and look at things like the condition of your property, how big it is, where it’s located and how many kinds of cereal you have.


Then, find out the remaining balance of your home loan. The difference between the value of your home and the remaining balance is your available equity.


2. Know what you want to use it for.


Even though it can seem like free money, the equity in your home is the result of your hard work. Think carefully about how you might spend it to add value to your existing home, or improve your lifestyle in ways like:

  • Renovations or refurbishments on your existing home.

  • Investing outside of property, like in shares.

  • Putting down a deposit on an investment property.

  • Buying a new car, or taking the family on a holiday.

3. Redraw from your loan.


If you’re ahead with repayments, you might be able to use redraw to dip into your equity. That means accessing the extra capital you’ve paid down, not the entire balance of your equity, so you’re limited to the value of those additional repayments. That may not be enough if you’re planning something big like a home renovation.


You could also consider a loan top up. This is as easy as getting in touch with your lender and asking to add a bit more onto the balance of your loan and using that money to further invest.


4. Refinance your home loan.


Refinancing your home loan to access equity can be great for two reasons:


1. You can tap into the funds you need.

2. It’s a chance to secure a better deal than your current home loan.


Yes, refinancing does take a bit more effort than a loan top up or asking a kind billionaire but it could mean savings with a lower rate, better loan features or just the pleasure of a great new lender.


5. Avoid putting yourself under financial stress.


You know when you were a kid and you had five dollars and you wanted to spend it so badly your whole body hurt? But your parents made you save it so you could “learn”?


Just because you have equity, doesn’t mean you have to use it. Your access to it will depend on your current income, financial history, living expenses and the amount owing. There may also be additional fees associated, and, of course, using your equity means your home loan balance will increase.

Your Choice Mortgage Brokers Pty Ltd ATF Halo Innovation Trust trading as Heart Mortgage Services - Australian Credit Licence 38643

The information contained herein is of a general nature only and does not constitute advice. You should not act on any information without considering your personal needs, circumstances and objectives. We recommend you obtain professional financial advice specific to your circumstances. The views expressed here are not ours. While the information contained in this article may contain or be based on information obtained from sources believed to be reliable, it may not have been independently verified. Where information contained in this publication contains material provided directly by third parties it is given in good faith and has been derived from sources believed to be accurate at its issue date. To the maximum extent permitted by law: no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up to date or fit for any purpose; and no party or associated entities as mentioned is in any way liable to you (including for negligence) in respect of any reliance upon such information. This article may also contain links to websites operated by third parties who are not related to us. These links are provided for convenience only and do not represent any endorsement or approval by us.

4 views

Our Services

Heart

Townsville & Rockhampton

Heart Financial Advisers       Heart Mortgage Services       Privacy Policy        Financial Services Guide       Credit Guide       Complaints Process

 

Stu Varidel and Your Choice Financial Planning Pty Ltd ABN 80124246877 trading as Heart Financial Advisers are authorised representatives of Sentry Financial Services Pty Ltd ABN 30 113 531 034 & AFSL 286786

 

Your Choice Mortgage Brokers Pty Ltd atf Halo Innovation Trust trading as Heart Mortgage Services - Australian Credit Licence 386437

 

Disclaimer 

The information contained or referred to on this website has been compiled for the convenience of our clients, looking for information about us and the services we provide both financial advice and credit services. We have taken all reasonable care in preparing and presenting this information, but we cannot warrant that it is complete and/or accurate in all respects or fully up to date. We are not responsible for any eventualities arising from the use of the information in this website for any purpose whatsoever.

 

General Advice Warning The information provided on this website has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your Adviser before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither Heart Financial Advisers and Heart Mortgage Services nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.

Level 1, 25 Sturt Street, Townsville, Qld, 4810

PO BOX 207 Deeragun, Qld, 4818

1300 861 143