Sometimes people take out a small loan against their mortgage or borrow some money to pay off credit card debt.
You can essentially borrow money for any reasonable purpose – a wedding, a new roof, your third Lamborghini – but only up to a certain amount.
I bet you’re curious now to see how much you could borrow? Well, you don’t even have to pick up the phone to do this.
All you need to do is just enter a few details about your home (we don’t ask for your email or phone number, it’s totally confidential) into our refinance calculator and in a few minutes you’ll see what options are available to you. Easy as.Click here to use our refinance calculator
Each lender has their own rules and sets their own limits, and above these limits you will need to prove how the funds will be used.
Your equity is the difference between the value of your home and the amount you still owe on it. Thanks to the rise in property prices over the last decade or so, it could be a substantial sum if you have owned your property for some time.
For example, let’s assume you bought a house 10 years ago for $500,000 and have $200,000 left on the home loan. If this property is now valued at $800,000 then your equity is $600,000.
Most lenders allow borrowing of 80% of the value of the property, minus the debt that you have left to pay. So in this example, you could access $440,000 of your equity as long as you meet your lender’s requirements around use of the funds.
With this sum, you could make significant investments and potentially take advantage of tax benefits – such as depreciation and negative gearing on an investment property – to get your money working for you.
Bear in mind though, the amount of equity you can access will depend on the lender’s valuation – and this could be lower than you expect. Many lenders also place restrictions on equity home loans because of the risk of the lump sum released not being used for its intended purpose.
Also, because you will be paying off this amount over the term of the loan you might end up paying more interest than you would have paid if you had taken out a shorter loan, such as a personal loan over five years.
What you’ll need to show your lender:
- ID, payslips and bank statements
- A home valuation
- Absolute assurance you’re not borrowing to start an underground greyhound racing racket
Got a few more questions about this?
Why not give uno a call and we can help you work out if it is the right option for you.
Contact a uno broker today.