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Turning home equity into opportunity
From renovating to investing, there’s more than one way to make home equity work for you.
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If you’ve owned your house for a while, you may have built up something known as equity.
Whether you're planning home renovations, looking to buy an investment property or start a new business, home equity could be a helpful tool in achieving your goals.
What is equity?
Home equity is the difference between your home’s market value and what you still owe on your home loan. In other words, the portion of the property that you own outright.
Equity can be used as security with most lenders, offering you the opportunity to access funds for your goals.
As not all your equity is accessible, it’s important to understand usable equity and how you can make the most of it.
Finding usable equity
To find your usable equity, start by determining your home’s market value. Most lenders will allow you to access up to 80% of this amount, less your outstanding loan balance.
As an example, let’s say your home is worth $750,000 and you owe $500,000. Calculating 80% of $750,000 gives us $600,000. Subtracting your $500,000 loan balance then leaves you with $100,000 in usable equity.
Equity can change with market conditions and principal repayments, so be sure to crunch the numbers again if it’s been a while.
Making it work for you
The great thing about equity is its flexibility, as it can be accessed in various ways depending on your needs. You could use it to:
• Buy an investment property
• Renovate or upgrade your home
• Consolidate debt and manage expenses
• Fund a new car, holiday, business, and more
Note: Lenders may have different borrowing limits and conditions.
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Our top three tips to help you take the leap into property investment.
Chat with a lending expert
Making the most of your home equity starts with the right guidance.
From calculating usable equity to exploring how it could help you move towards your goals, a lending expert can provide personalised support.
To get started, reach out to your local Liberty Adviser today.
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