Equity is the difference between the market value of your property and the amount you still owe on your home loan. You can often access this equity and use it to improve your lifestyle.
If you’ve paid down your loan or your home has increased in value, you may be able to use your equity for:
You can access your equity by withdrawing extra repayments under a redraw facility or topping-up your loan. You can also take advantage of a reverse mortgage if you’re over 65 and own your own home, which allows you to withdraw regular payments on your home loan in a lump sum or periodically, without limiting your lifestyle or selling your home.
To find out how much equity you have in your home, you will need to get a property valuation. Most lenders will allow you to borrow up to 80% of the value of your home and if you would like to borrow more than this, you will need to pay Lenders’ Mortgage Insurance or a Low Deposit Premium.
Whether you can borrow additional funds to access the equity in your home will depend on a number of factors, such as income, living expenses and how much you owe.
There are a number of ways you can build equity in your home, so you can improve your financial position and your lifestyle:
Using the equity in your home means the total amount you owe on your home loan will increase, which can result in higher monthly repayments. There may also be restrictions on your home loan that can prevent you from making additional repayments or accessing the equity in your home.