Unlocking Home Equity:
How to Use Your Property’s Value for Further Investing
Your home is more than just a place to live—it can also be a powerful financial asset. If you’ve built up equity in your property, you may be able to use it to secure further loans for a variety of purposes, from investing to renovating or consolidating debt. Here’s everything you need to know about leveraging your home equity.
What is Home Equity?
Home equity is the difference between the current market value of your home and the remaining balance on your mortgage. As you pay down your loan or as your property value increases, your equity grows.
Example:
If your home is worth $800,000 and you owe $400,000 on your mortgage, your equity is $400,000.
However, there is a bit of a catch. Lenders typically only allow you to borrow up to 80% of your home’s value, minus the amount still owing on your mortgage.
Example:
If your home is valued at $800,000, 80% of that is $640,000.
If you still owe $400,000, you may be able to access up to $240,000 in equity.
What Can You Use Equity For?
Using home equity can be a strategic financial move for many purposes, including:
1. Buying an Investment Property
Many homeowners use equity as a deposit for an investment property, helping them grow their wealth through real estate.
2. Home Renovations
Renovating your property can increase its value, making it a smart reinvestment of your equity.
3. Debt Consolidation
Using home equity to pay off high-interest debts (such as credit cards or personal loans) can simplify your finances and reduce interest costs.
4. Business Investment
If you’re starting or expanding a business, accessing home equity can provide the funds needed to grow.
5. Education or Major Life Expenses
Equity can also be used to cover education costs, medical expenses, or other significant financial commitments such as weddings.
Step-by-step Guide On Using Your Equity
Calculate Your Equity – Determine your home’s current value through a property valuation from a real estate agent, lender, or mortgage broker. Use an online home equity calculator to estimate the amount available.
Choose the Best Loan Option – Decide on the right loan type based on your needs, such as a home equity loan, line of credit, or reverse mortgage. Consulting a mortgage broker can help you maximize benefits.
Understand Loan Terms & Conditions – Carefully review interest rates, repayment structures, and potential fees before committing to a loan
Compare Lenders – Research different lenders to find the best interest rates and repayment options. Reading customer reviews can help gauge their service quality.
Prepare Required Documents – Gather necessary paperwork, including tax returns, bank statements, payslips, and identification, to streamline the loan approval process.
Here at WestGen Finance, we will guide you along each step of the way. Our goal is to get you to where you want to be with your equity and finance goals.
Interested in using your equity for further endeavours in life? Contact us now today and we'll guide you along the way.
Get in contact
Get in contact
Fill in your details and we will give you a call within 24 hours.