Access your Equity
Many homeowners find it difficult and frustrating saving for things like holidays or renovations whilst paying off a mortgage – but it doesn’t have to be that way. Home equity loans are designed to give you access to the equity in your existing home loan via a line of credit loan.
Mortgage refinancing is a common way of accessing the equity you have built up in your existing property. The equity in your home is the distinction between the property value and what you owe on your mortgage.
When refinancing the amount you can borrow is subject to the amount of equity you have built up in your property and other criteria; as a guideline you are limited to borrowing a maximum of 90% of the value of the property.
You can use the funds from your line of credit loan to buy an investment property, renovate your existing home or to take a holiday.
How do home equity loans work?
Home Equity loans are most commonly offered as a line of credit loan facility, which allows you to withdraw funds up to a set limit at any time. You may be able to draw down the initial equity loan either as a lump sum or in stages. Generally a line of credit loan is an interest-only loan, and in some cases you may be able to capitalise the interest payments.
Interest rates are generally slightly higher on a line of credit than standard variable home loans – however, some lenders offer better rates on these loans to encourage refinancing.
Thinking of refinancing?
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