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When You Have Equity – You Have Options

With the Real Estate market being particularly buoyant, many homeowners are seeing significant capital growth, which is fantastic.  Some are perhaps unaware of their increased equity whereas others know they have it but just don’t know how much and what to do with it.

Here is a breakdown of what potential options may be available to property owners who have recently gained equity and how to utilise it to the best ability.

Refinance to a lower rate

Some mortgage holders have been unable to revisit their lending options simply because they have had not enough equity to borrow against. This is particularly true of first home buyers who often get their first loan with a high loan to value ratio just to get a foot in the door of the property market. High LVR loans often come with a higher interest rate so this means the mortgage holder are stuck paying this until they can refinance to a new product under 80% LVR.

Once there is equity available in a property that was once holding a mortgage holder back from further lending, a new application may be sought to secure a better rate and realise greater savings.

Remove a Parental Guarantee

It’s quite common for parents to offer their home as additional security to help their children buy their first property and avoid costly mortgage insurance when a sizable deposit is lacking. Once there is enough equity to bring the LVR down to under 80%, the parent’s property may be moved from the security position, which is ultimately the goal to ensure they do not have any unnecessary encumbrances over their property.

As part of the guarantee removal, the borrower’s overall lending position can be reviewed and potentially be refinanced to a lower rate which will be a win-win situation all round.

Renovate your home

Having equity to borrow against means that there is the potential to release funds to complete home improvement projects or the longed-for renovations that were once unattainable. This can be done through your existing lender by way of a home loan Top-up or by refinancing to a new lender if that is more financially viable.

Purchase an Investment Property

If you have sufficient equity to borrow against and purchasing an investment property has been on your radar, then this may be achievable with equity to borrow against. Of course, the ability to service the new loan is also a factor and consultation with your accountant and financial planner a must.

Upsize your Home

If you are outgrowing your current property but have not been able to upsize, then having equity in your existing home may pave the way. By either selling first to release funds for a deposit on a new home or exploring the bridging finance option whereby you buy a new place while in the process of selling your existing one, having a boost in equity means that the bigger home you need may be closer than you think.

Consolidate your Debts

If unsecured lending has gotten away from you and you find yourself with personal loans, car loans, credit cards or all the above, then being able to consolidate them in your home loan may be a positive step to lessen your financial burden. Getting off high interest products and rolling them all into a much lower rate will solve cash-flow issues and set you up for a more solid financial future.

Here’s how we can help

If any of these scenarios may be on your wish-list then contact the Blackburne Mortgage team and we can start the process by ordering a bank valuation on your home to firstly understand what your equity position is. Then your mortgage broker will review your options with you so you can determine which path you wish to take.

With equity there are options and there is no time like the present than to realise the benefits of what it may hold. Contact the Blackburne team today to get started.

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Take control of your finances and start paying less on your mortgage today. With our no cost, no obligation review of your existing loan, our expert mortgage brokers will analyse your current loan and provide you with a tailored solution to help you save on interest and pay your loan off quicker.

Paul Prindiville


0438 196 695