Home equity is the difference between your property’s market value and the balance of your mortgage. For example, if your house is valued at $600,000 and the current debt is $250,000, the equity in the home would be $350,000. If you’ve owned your home for a few years, there’s a good chance that you’ve built up some reasonable equity in your property. This can be an extremely valuable resource in regard with property investment.
Here are some strategies that our team at KBZR commonly advise our clients to best optimize their accumulated equity.
1. Renovate
This is one of the most effective strategies used by property owners in the current economy. As a homeowner, you can capitalise on the increase in property value to borrow money against home equity for refinancing purposes or to fund other expenditures. If the new value of your property has increased and your borrowing capacity can support it, our team at KBRZ can support you with our wide range of loan solutions that are specifically tailored for each of our clients.
2. Purchase an investment property
With the current state of the housing market in Australia, property owners can reap numerous benefits. When investing, you should always be aware of the risks. When purchasing a second property you are concentrating your wealth instead of diversifying your assets. Indicating if the property market declines, so does the value of your home. Consider your own knowledge of property investment, especially the particular market you’re looking to buy into, it is always helpful to seek advice from a financial consultant. Finding the cheapest investment home loan on the market can also help in the long run. It enables you to save more by paying less interest. Whenever you are looking for property investing, KBRZ is an experienced expert which will help you get the best deal in the market.
3. Refinance to a better rate
Lenders heavily favor borrows with equity as it lowers their risk of losing money. As a result, clients can expect to be rewarded with discounts when borrowing against their equity. It is worthwhile to consolidate with our team at KBRZ in order to find the most optimal solution for you that will allow you to save a good portion of your wealth.
4. Consolidate other loans
If you have other personal loans, car loans, or credit cards with high-interest rates, it may be a chance to consolidate this debt onto the low home loan rates today. This greatly simplifies your banking by requiring one payment instead of making multiple payments through accounts. Doing this generally means your monthly commitment is less, so it may be optimal to reallocate these extra funds into the loan to reduce the loan term.
5. Leave it alone
Given the current financial situation, it may be best to take advantage of the historically low rates and make a good dent in the loan. If you are in a position where you can comfortably make payments, then this could be the perfect opportunity to increase payments and pay off a good portion of the loan.
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