Being a homeowner comes with many perks and building your equity is one of them. But what is equity in property and how can you use it? We’re going to go through everything you should know about your home’s equity and how you can benefit from it.
Here at No1 Property Guide, we specialise in helping people get into their new home. And utilising equity is one of the many ways we maximise your ability to get that done. When you work with our team of Investment Specialists, you’ll get access to Darren Walters’ experience in property and lending policies, as well as his exclusive new home system. His unique system has helped thousands get into their new house and it could help you secure your next property as well
Take the first step to get your next house by filling in our pre-qualification form.
What is Home Equity?
To put it simply, your home equity is the difference between the current value of your house, and how much you still owe on your home. The majority of people don’t completely own their property, they own a slice, and the rest is being paid off.
Let’s say you purchase a home 5 years ago for $450,000 and you have $350,000 left on the mortgage. And in those five years, your home’s value has risen to $550,000. In this case your equity is $200,000 ($550,000 – $350,000 = $200,000).
In this scenario, you’ve got $200,000 in available equity. However, most lenders will only allow you to access up to 80% of that equity. This is referred to as usable equity.
Owning a house is widely considered to be one of the best ways to build wealth. It’s a fantastic way to ensure you’ll be financially covered when you retire. But you don’t need to wait until retirement to make use of your equity. When you work with us, you could use that equity to build a property portfolio.
How to Use the Equity in Your Home?
You’ve got quite a few ways to access your equity. When you work with our team, we’ll analyse your situation, to provide you with your best option. Let’s go through the common ways to tap into your property’s equity.
This is a common method property investors use to build their property portfolio. By putting up one house as collateral to get another, you’ll be able to get favourable home loan conditions because you’re putting up a significant asset against the loan.
Line of Credit
You’ll get a line of credit based on how much equity you have. You’ll be charged interest on the amount you use. It functions similarly to a credit card, but the funds are secured by your home’s equity.
A reverse mortgage allows you to borrow back the money you’ve paid towards your loan. This type of financing comes with restrictions. The amount you can borrow is based on your age. Typically, reverse mortgages are only available to retirees. So, the younger you are, the less likely you’re able to use this method.
Start working with No1 Property Guide to discover your factual options. Fill in our pre-qualification form and we’ll help you make the most of your equity.
Can I Use Equity in Property as a Deposit?
Yes. You can pay a deposit for a second property using a tactic called leveraging. This strategy uses the equity in your existing property to get a new one. Take advantage of your assets to get your next investment property.
Many investors utilise equity to expand their property portfolio. It’s the most powerful tool in a property investors arsenal. By making use of your equity today to get a deposit for a house, you can enjoy the gains in capital growth from all your properties. And every time you get a new house, your rate of growth increases!
If you wait and don’t expand your portfolio, you’ll miss out on capital gains and will need to pay a higher price to get another property.
Darren Walters’ new home system is designed to help everyday people get into the property market, whether it’s your first home or an investment property.
How to Build Equity in Property
Equity is a fantastic tool you can use to create wealth and get your next property. But before you can start with that, you’ll need to build up your home’s equity. So, let’s go through the ways you can increase the equity in your property.
Paying Off Your Mortgage
Every time you make a repayment towards the principal balance of the loan, you’ll be building equity. The portion of your repayments that goes towards interest does not build your equity.
If you have the option, pay more than the minimum on your loan. Increasing your repayments, it’ll speed up how quickly you’ll build your equity and shorten the length of your loan.
When You Pay the Deposit
When you pay a deposit, it’ll go directly toward the principal of the loan. The larger the deposit, the more equity you have at the beginning of your mortgage.
Let Your Home Increase in Value
Australian property prices have historically doubled every 10-15 years! And when your house rises in value your equity increases as well.
You can also renovate your home to increase its appeal and value. When you plan on using your property’s equity, you’ll need to revalue your home. Especially if you’ve made significant changes to the house.
Refinancing the Equity in Your Property
Refinancing your existing home is a common way to build your equity. By refinancing your home, you’ll be leaving your current mortgage and switching to a new one. You’ll need to revalue your home to determine its current worth. It’ll depend on your particular circumstance, but your property is likely to have risen in value.
It’s possible for you to get a better mortgage with a lower interest rate and lower repayments. These changes in your finances could be the difference between getting a new mortgage at a great rate. Or being prevented from getting your next property.
When you work with No1 Property Guide, we’ll take you through everything that’ll change with your mortgage and repayments. Our team takes the time to walk you through all your options to make the most of the equity in your house.
We’re in the business of securing new properties for our clients and maximising their capital growth.
By using your equity, we can help you grow your property portfolio, that’ll result in skyrocketing capital gains. And the sooner you start building your portfolio, the more growth you’ll see
You could choose to hold onto 1 or 2 properties and retire comfortably or build your property empire. Whatever your goal, we can help you make it happen, just by using your equity.
To get into contact with our Investment Specialists, all you need to do is fill in our pre-qualification form and you’ll be provided with everything you’ll need to get your next property.