Understanding equity
You didn’t rush into buying your home, so don’t attempt to access your equity without fully understanding the process.
The amount of equity in your home is determined by the difference between the market value of your home, and the amount you still have to repay on your mortgage. Put simply, the more you pay off your home loan, or as the value of your home increases, your equity grows.
Before you do a few quick sums and start planning what to do with your equity, you should consider that by accessing your equity, the total amount you’ll owe on your mortgage will increase, which can mean your repayments rise. What’s more, depending on the type of home loan you have, you may face restrictions which prevent you from taking advantage of your equity or even growing it by making extra repayments.
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Growing your equity
There are basically two main ways to make sure your equity grows, and that is by making changes around the house to ensure its value continues to grow or structuring your mortgage and repayments correctly.
1. Increase your property value
Of course, it’s fair to think that all property values are slowly rising. If you want to give your property value a real kick-start, though, make some changes which ensure it will be viewed favourably by the market. Getting your renovations right will not only improve your quality of life now, but it will also mean that your property will be worth more.
2. Structuring your loan and repayments
A sure-fire way to increase your equity is to simply reduce the balance of your loan by increasing either the size and/or frequency of your repayments. Also, by opening an offset account, your savings are offset against your loan balance, reducing the interest you pay.
And if you know you’re going to regularly want to access your equity, look for a Line of Credit Loan. By making more regular repayments, the amount available for you to withdraw will automatically increase.
Accessing your equity
To work out how much equity you have in your home, it’s probably wise to get an up-to-date property valuation for the property.
To access your equity, you can re-borrow extra repayments if your loan features a redraw facility, or by topping up your loan balance. Greater Bank customers, where redraw is available on their Home Loan, can re-borrow extra repayments with free redraws via Online Banking.
Talk to your lender about how much equity you have in your home and the best way to access it.
If you’re over 60 and own your own home, you may also look to consider a Reverse Mortgage. This option allows you to make regular withdrawals on your home loan without having to sell your home.
Reverse Mortgages
With a Reverse Mortgage, you can unlock the wealth and turn your bricks and mortar into a cash resource to fund the lifestyle you choose.
Improve your outlook
Once you’re able to access your home’s equity, you can then use it for a number of purposes to improve both your financial outlook and your ongoing lifestyle.
The most common uses include:
1. Investing
Whether for your next home, an investment property or in other options such as shares or managed funds.
2. Lifestyle
Need a new car or are overdue for a family holiday? Tap your equity and make it happen.
3. Home-front
Family growing and need extra room, or have you always wanted a brand new pool and deck? Renovate using your equity.
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*Conditions, fees and charges apply to all loans. Subject to meeting Greater Bank's lending criteria.
Greater Bank, part of Newcastle Greater Mutual Group Ltd ACN 087 651 992, Australian Financial Services Licence/Australian credit licence 238273
++$2,000 cashback for loans ≥$250,000 or $2,500 cashback for loans ≥$500,000. Only one (1) Cashback Payment per eligible loan, and for first eligible loan only. Not available in conjunction with any other promotional payment. Offer may be varied or withdrawn at any time. See the full Cashback Offer Terms and Conditions. Terms, conditions, fees, charges and credit criteria apply.
~At the end of the fixed rate period customers can chose to re-fix their loan for another fixed rate period or let the loan revert to the applicable variable interest rate based on the loan and repayment type.
^Comparison rate is based on $150,000 over 25 years. WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
#Discounted rates include a discount on Home Loans of $150,000 or over and for owner occupied Home Loans with an LVR 80% or below and for investment Home Loan with an LVR 80% or below and apply to new borrowings only. Discounted rate not available for Line of Credit facilities.
+Additional costs may apply if your loan has a fixed rate.
All new interest-only home loans, attract a 0.10% p.a. margin above the applicable Principal and Interest base rate. All new Line of Credit home loans, attract a 0.10% p.a. margin above the applicable Line of Credit base rate. The all-up interest rate which includes any margins, will be set out in your credit contract. View our Terms and Conditions.
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