How to unlock your useable equity

Could there be a goldmine underneath your feet? If you’ve owned a home for a number of years, there might be. Find out how accessing your useable equity could help you achieve your financial dreams sooner rather than later.

What is useable equity?

You’ll already be familiar with equity as the difference between the value of your home and the amount you still owe on your mortgage. The more you’ve paid off or the more your home has increased in value, the higher your equity will be, and the closer you’ll be to owning your own home outright.

However, there are other benefits to having equity; you can use part of it to access lending on another property, unlock your equity as cash, or otherwise boost your finances. In fact, as long as you keep 20% equity in your family home (or 35% in an investment property), you can use every remaining dollar elsewhere.

These ‘remaining dollars’ are called useable equity, and they are often the key for savvy investors to expand their existing portfolio – or just afford that holiday home they’ve always wanted.

Here’s a quick example:

  • The value of your home is $800,000.
  • You owe $300,000 on your home.
  • Your equity is $800,000 – $300,000 = $500,000.
  • 20% of the value of your home is $200,000.
  • So your useable equity is $500,000 – $200,000 = $300,000.

Need cash? Refinancing and unlocking useable equity could be the answer.

How can you use useable equity?

While we’ve highlighted using these newly unlocked cash to expand a portfolio or buy a bach, many people instead use it to:

  • Buy a new car or boat.
  • Go on holiday.
  • Pay down other debts.
  • Help their children (or grandchildren) into their first home.

As your equity increases, your useable equity also increases. The more you pay off your mortgage or the more your home increases in value (either through capital gains or through renovations), the more useable equity you’ll have to work with.

If you’ve ever wanted to do something but all of your capital has been locked up in your home, accessing useable equity offers you the opportunity to do what you’ve always wanted, whether that’s financial, personal or otherwise.

If you’re looking to buy another property useable equity could help.

How do you access your useable equity?

Accessing useable equity involves re-financing and will increase how much you owe on your mortgage overall. However, interest rates at the moment are at an all-time low. It’s more affordable than you might think, and offers a far better deal than you’ll find with most other credit vehicles like credit cards or personal loans. In fact, you may even find you end up paying less every month if it’s been a while since you last refinanced.

The best way to access your equity is to speak with a mortgage broker first. They’ll be able to find you the best deal on interest rates and help you find the best lender for your needs. Get in touch with one of our skilled mortgage experts to start the ball rolling and get access to your useable equity.


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