Understanding equity
You didn’t rush into buying your home, so don’t attempt to access your equity without fully understanding the process.
The amount of equity in your home is determined by the difference between the market value of your home, and the amount you still have to repay on your mortgage. Put simply, the more you pay off your home loan, or as the value of your home increases, your equity grows.
Before you do a few quick sums and start planning what to do with your equity, you should consider that by accessing your equity, the total amount you’ll owe on your mortgage will increase, which can mean your repayments rise. What’s more, depending on the type of home loan you have, you may face restrictions which prevent you from taking advantage of your equity or even growing it by making extra repayments.
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Growing your equity
There are basically two main ways to make sure your equity grows, and that is by making changes around the house to ensure its value continues to grow or structuring your mortgage and repayments correctly.
1. Increase your property value
Of course, it’s fair to think that all property values are slowly rising. If you want to give your property value a real kick-start, though, make some changes which ensure it will be viewed favourably by the market. Getting your renovations right will not only improve your quality of life now, but it will also mean that your property will be worth more.
2. Structuring your loan and repayments
A sure-fire way to increase your equity is to simply reduce the balance of your loan by increasing either the size and/or frequency of your repayments. Also, by opening an offset account, your savings are offset against your loan balance, reducing the interest you pay.
Accessing your equity
To work out how much equity you have in your home, it’s probably wise to get an up-to-date property valuation for the property.
To access your equity, you can re-borrow extra repayments if your loan features a redraw facility, or by topping up your loan balance. Greater Bank customers, where redraw is available on their Home Loan, can re-borrow extra repayments with free redraws via Online Banking.
Talk to your lender about how much equity you have in your home and the best way to access it.
If you’re over 60 and own your own home, you may also look to consider a Reverse Mortgage. This option allows you to make regular withdrawals on your home loan without having to sell your home.
Improve your outlook
Once you’re able to access your home’s equity, you can then use it for a number of purposes to improve both your financial outlook and your ongoing lifestyle.
The most common uses include:
1. Investing
Whether for your next home, an investment property or in other options such as shares or managed funds.
2. Lifestyle
Need a new car or are overdue for a family holiday? Tap your equity and make it happen.
3. Home-front
Family growing and need extra room, or have you always wanted a brand new pool and deck? Renovate using your equity.
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^Comparison rate is based on $150,000 over 25 years. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
#Discounted rates available for new home loans $150k+, with LVR of 80% or less.
~At the end of the fixed rate period customers can chose to re-fix their loan for another fixed rate period or let the loan revert to the applicable variable interest rate based on the loan and repayment type.
‡A prepayment fee applies to fixed rate loans if you make more than 5% in extra payments. Contact us before making additional repayments to get an estimate of the prepayment fee.
Interest Only home loans attract a 0.10% p.a. margin above the applicable Principal and Interest interest rate. Your interest rate which includes any margins, will be set out in your loan contract.
◊Cashback offers:
*Online Cashback of $2,500 for eligible home loans $250-$499k or $3,000 for loans ≥$500k available for applications submitted via the Greater Bank Digital Home Loan application channel (online application) with 80% LVR or below. Excludes refinances from Greater Bank or Newcastle Permanent. If eligible, cashback payment will be made within 60 days of the loan settlement date (loan must still be open at time of payment). Only one (1) cashback payment per eligible loan and for first eligible loan only. Not available in conjunction with any other cashback or promotional payment (except any interest rate discount offered). Offer may be varied or withdrawn at any time. See the full Online Cashback Offer Terms and Conditions.
+Cashback of $2,000 for eligible home loans $250-$499k or $2,500 cashback for loans ≥$500k available for refinance applications submitted via Greater Bank lenders (not online), with 80% LVR or below. Only one (1) cashback payment per eligible loan, and for first eligible loan only. Not available in conjunction with any other promotional payment. Offer may be varied or withdrawn at any time. See the full Cashback Offer Terms and Conditions.
**$2,500 cashback for loans ≥$250,000 with LVR less than or equal to 95%. Only one (1) Cashback Payment per eligible loan, and for first eligible loan only. All borrowers must be a first home buyer, which means they have never owned or co-owned a residential property. Not available in conjunction with any other promotional payment. Offer may be varied or withdrawn at any time. See the full First Home Buyer Cashback Offer Terms and Conditions here.
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