Unlocking your equity
Got big plans for you and your family? Did you know that using the equity in your home can be the ideal way to finance your goals?
There is no doubt that paying off your mortgage is an important priority, but it’s also well worth balancing your goals of becoming debt-free against the benefits of having money to enhance your.
With interest rates holding steady, this is arguably a very good time to be taking out a loan to finance your plans, and borrowing money against the value of your home can be one of the least expensive loans on the market. Research shows that many Australian households are equity rich, thanks to a steady rise in property values in recent years and record low-interest rates encouraging borrowers to pay down their mortgages faster.
Simply put, you can calculate the equity you have in your home by taking the current market value and subtracting the total amount of your current mortgage balance. For example, if your property is worth $400,000 and you have a mortgage of $150,000, then you have $250,000 in equity.
Borrowing more through your mortgage is an attractive option because interest rates for home loans are generally lower than for personal loans so using equity can be a good option for borrowing money without making a substantial impact on your cash flow.
Paying for lifestyle goals with equity
Although equity is a less expensive way to access cash for a brand new car or holiday, remember that you’ll be paying off the loan, long after you’ve made the purchase maybe think about taking your equity and investing it for a lifestyle goal that will have a long-term benefit, like setting up a fund for your kids’ education.
Using your equity can be a very effective way to build value in your home or generate a new source of wealth and income through investing. By extending your mortgage to upgrade your current property, you’ll get to enjoy a better quality of life in your home, but you won’t get a financial return on your investment unless you sell.
Another option is to take your equity and use it to fund an investment property instead. If you plan it right, an investment property can boost your retirement savings and improve your future cash flow so you can afford holidays, new cars and school fees in years to come.
Unlock The Potential Of Your Existing Equity
Many people forget that accessing money tied up in their house is the cheapest and most effective way to do things such as putting in a pool or renovating the kitchen and bathrooms. Likewise, equity can also be used to borrow 100% of an investment property which for many people is the beginning of long-term wealth creation.
The equity you have in your home can assist with refinancing in order to consolidate multiple debts into a single, lower interest rate loan, and many people also use the equity in their home to create a small buffer to protect them in the event of involuntary redundancy.
Let CapitalQ help you
Through our strong relationships and long-standing connections with these mortgage providers, we can often secure better rates and deals than if you were to approach them directly.
CapitalQ can bring the banks to you. We deal with all major banks and building societies plus others with which you may not be familiar.
While we specialise in home loans our experienced mortgage broker can obtain loans for virtually any purpose including equipment financing and investment loans.
We can also advise on debt consolidation strategies designed to reduce interest and save you money.