EQUITY RELEASE
Want to use the equity in your home
If you are looking to purchase an investment property/a new home, renovate your existing home, start a family, go on a vacation, purchase a new car, consolidate your debts or need cash to pay for bills of a medical treatment then you may be able to access the equity in your home to fund any of these.
- Deposit Funding
- Renovation
- Debt Consolidation
- Investment Property
Need assistance? Just contact us and we will help!
In Focus
Home Valuations
The valuation you get for your home is critical to the amount of equity you can access.
The first notable thing is that a valuation is done by a qualified valuer for the lender, and is not the same as a property appraisal you may get from a real estate agent.
The valuer will give the lender with a conservative estimate of your property’s value. This is often lower than you expect. This is because of the valuation being based on the amount of money the lender may expect to get if the property required to be sold in a distressed situation. At the end, valuation is used to limit the lenders risk, not offer you a market valuation of how much you would achieve when you sold your property.
As such, the amount of equity you can access may be different to what you think, so it’s important to start this process early so you can factor this into your plans.
So, how does a property valuation work?
A valuer will assess a property’s value based on the number of internal and external factors including:
- Location
- The structure & condition of the home
- Local council zoning
- Any planning restrictions
- The property size
- Vehicle accessibility and property parking
- The number and kind of rooms in the home
- Fixtures, fittings and any kind of improvements
They will look at these factors with recent comparable sales in the surrounding area, also reviewing the current market situations.
Once the report is prepared it will be given to your lender who will determine what your equity is and therefore how much of the value of your home you can access. Hopefully the equity amount the lender will release is enough to cover your plans!
At the last, cost of a valuation varies between $150 and $300; however in some cases the lender will offer a free valuation as part of the home loan package. Chat to your broker to determine the right loan for you overall.
Loan Types
When looking to access your equity the following are the loan types or features which may be relevant for your needs.
1
Line of Credit
A line of credit enables you to draw on funds as you require them up to an approved credit limit. Your minimum monthly payment is the interest charged on the outstanding balance each month. By taking out a line of credit on an existing property, it is possible to use any equity from that property to fund any of your purposes – such as buy another property or pay for your kids’ school fees.
2
Feature
Rather than a loan type there is a feature that you may want to consider when you refinance to access your equity. An offset account can be used to place the equity you have released. This will reduce your interest payments on the balance of the loan while the money is in the offset while still allowing you the flexibility to access the funds as you need them.
Ask a Broker
While the basics of a home loan are similar when either purchasing or refinancing a home, there will be a number of different decisions you will need to make to access the equity in your property. Here are some questions you should ask your broker so we find the right home loan for your needs.
- How do I access my equity?
- Do I require refinancing my property?
- Will I need to have my property valued?
- Is it a good idea to add an offset account as a loan feature?
- I have heard about a line of credit – is this a nice idea for me?
- Does a lender need to know what I am doing with the equity?
- What paperwork will be required?
- How quickly can I get access to the money?
- Is now a good time to fix the rate on my loan?
Ask yourself
There are some questions to think about that will guide you and your home loan broker decide what home loan and features are best for you.
- Do you know how much equity you have available?
- What do you want to use the equity for?
- How much equity do you require access to?
- When do you want the money by?
- Is the home loan you need the equity from in single or in joint names?
- Who is your existing lender?
- Do you need to stay with your current lender?
Need assistance? Just contact us and we will help!