Home equity loan

A home equity loan gives you access to flexible finance options to help you consolidate debts, renovate your home and increase your wealth and financial security.

Home equity loan

A home equity loan is a finance option offered to home owners who have paid back at least 20% of their mortgage. It is borrowed against the value of your home so the size of the equity you have access to is very much dependent upon the property market. As house prices continue to increase across Australia, most Australian home owners are likely to accrue a sizeable amount without even realising it.

 

When is a good time to think about a home equity loan?

 Brad and Yosef bought their property 12 years ago. In well-paying jobs and enjoying the metropolitan life close to the fringes of the city, they worked hard to tackle their mortgage. Like most Australian families, Brad and Yosef were more concerned with ensuring that they could comfortably pay off their mortgage and looked forward to the day they owned their house outright. Property prices have soared since they purchased their home and now, a little older and a little less into the hustle and bustle of city life, Brad and Yosef have been thinking about buying a holiday home on the coast where they might eventually retire.

Lenders will allow borrowing up to 80% of the equity accrued on a property so this means if Brad and Yosef have $400 000 left on their mortgage and their property is currently valued at $800 000 then they could borrow up to $320 000. But this also means that their mortgage will increase to $720 000 so they will have to ensure they are prepared for the additional repayments.

 

How to increase the equity for a property?

As home equity is calculated on the value of your property versus how much you have remaining on your mortgage, getting the highest possible valuation will mean the best possible equity. Ensure your home is tip top condition for your valuation!