- lola@luminarfinance.com.au
- 45 Delawney St, Balcatta WA 6021
If you have owned your home for a few years, there is a good chance it has increased in value. That growth could mean you have built up equity – and potentially an opportunity to use it to invest in property.
Equity is the difference between your property’s current market value and the remaining balance on your home loan.
For example, if your home is worth $800,000 and your mortgage balance is $400,000, you have $400,000 in equity.
However, not all of that equity can be accessed. Lenders generally allow you to borrow up to 80% of your property’s value without paying Lenders Mortgage Insurance (LMI).
So, in this example, 80% of $800,000 is $640,000. Subtract your loan balance ($400,000), and your usable equity could be around $240,000.
Usable equity can act as a deposit or security for another property. Instead of saving for years, you may be able to leverage the value in your current home to purchase an investment property sooner.
Here’s how it typically works:
This strategy allows investors to build a property portfolio over time – using existing assets to create potential future wealth.
While using equity can be a powerful strategy, it’s important to consider:
Before making any decisions, it’s important to discuss your situation with a qualified mortgage professional. They can help you understand your borrowing power, loan options, and what’s suitable for your goals.
Using equity to invest in property can open up opportunities to grow your portfolio – but it should be done with careful planning and the right guidance.
If you are curious about how much usable equity you have or what investment options might be available, give us a call for personalised support.
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Fill in your details below to watch the full recording of “Pathway to Property” and gain valuable insights into navigating the property market.
