What is an equity loan?

The term ‘equity’ simply refers to the difference between the amount you owe on a mortgage and the value of your home.

A home equity loan is characterised by its flexibility and ease of use, allowing you to use the equity you have built up in your home as collateral security.

This type of loan can be used to purchase another property, for renovation purposes, to refinance your mortgage or to invest in shares.

Why do banks see equity releases as a problem?

All lenders have cash out restrictions and the major banks in particular are extremely cautious with the maximum amount of cash you can take out.

This is because the banks know that equity releases are approximately 2.4 times more risky than a normal loan to purchase a home.

For this reason the banks investigate what you will be doing with the money and have stricter guidelines for loan approval.

Which lenders do equity mortgages?

Equity loans can be financed through the major banks however this type of mortgage can be processed through the non-conforming and specialist lenders who are not as strict when it comes to releasing equity.

Please call us on 1300 889 743 or enquire online to speak to a mortgage broker who can help you find the best lender who will get your equity loan application approved.

What types of cash loans are available?

There are two main types of equity loans in Australia:

  • The lump sum cash type: This is where you get a lump sum for an investment or particular project and start paying interest immediately.
  • The Line of Credit: You only pay interest on the part of the loan that you have drawn down on.

However, you can refinance your entire loan to access the equity that has been built up on your home. Please enquire online to find out how this can work for you!

How can I benefit from equity finance?

Many Australians spend years saving up thousands of dollars to make a deposit for renovation purposes or to buy an investment property. Saving up for enough funds to complete the transaction may be a difficult task especially if all of life’s ongoing living expenses are taken into consideration.

Wouldn’t you agree that it would be more convenient if the process to renovate your home or to buy a new property was more flexible?

By using an equity loan you can start renovations on your home or purchase an investment property sooner. This will save you the hassle of providing the banks with a deposit that you would have saved up over several years. However it is important to remember that all debts need to be carefully managed in order to maximise investment returns and minimise risks.

Apply for an Equity Loan now!

Buying your own home is likely to be your biggest asset and would probably be the biggest investment you’ll ever make. Why not put this asset to work by taking out a home equity loan?

Please enquire online or call us on 1300 889 743 to get started today!

  • Lachlan

    Can I get finance to get some renovations done using the equity in my home instead of a solid cash deposit?

  • Hey Lachlan,

    Yes, you can use your equity to secure finance to renovate, however, please note that all of your debts need to be carefully managed in order to maximise your investment returns and minimise risks.

  • PHaze

    Do all lenders have cash out restrictions or are there some that don’t have these?

  • Hi PHaze,

    The major banks are cautious when approving equity loans, in particular when they have little evidence of what you are doing with the money. So the majority of lenders have a cash out restriction to release to as little as $10,000 – $50,000. Thankfully though, not all lenders have such cash out restrictions. Please call 1300 889 743 if you’d like to find out about these lenders and whether or not you can qualify with them.

  • Ralph

    What type of people do you guys recommend to use equity loans?

  • Hi Ralph,
    We only recommend people to get a home equity loan if they are confident to be disciplined in the use of their money. This is because there are people who apply for home equity loans and end up spending the money on lifestyle expenses and have no plan of how to pay the money back. As a general rule, it’s very cheap to release equity up to 80% of your property value though there are some lenders that can allow you to release up to 90% LVR but you’ll need to pay mortgage insurance.

  • Lisa

    Hi there,

    Interested to know whether an equity loan is in addition to current mortgage or whether it’s considered a refinance. I have a bit of an unusual situation and don’t wish to actually refinance the entire loan.

  • Hi Lisa,
    It’s a refinance of your current loan. Normally it isn’t a problem to refinance unless your current loan has a fixed rate in which case it may or may not be worthwhile. In some cases we can release equity with your existing lender which means you don’t need to refinance.
    Was there any particular reason you wanted to avoid refinancing?

  • Jesse

    If my wife and I have a joint personal loan currently, that we didn’t have when we originally signed up for the home loan, but want to redraw the equity in our home loan, to purchase a new car, will having the joint loan harm our chances of being approved?

  • Hi Jesse,
    Having a personal loan will only be a problem if the payments are high enough to mean that you don’t have the borrowing power to increase the limit on your current home loan OR if you have missed payments / have a default because of the personal loan.
    If you have made extra payments on your home loan e.g. you owe $400,000 and the limit is $500,000 then you can just redraw the extra repayments without approval from your bank. So even if there are other problems then this should be fine.

  • FIona Butler

    My husband and I were looking for a home equity loan to finish renovating our home (70% complete) and to consolidate credit card debt (Used for going over budget with renovation). Because of the high balances, my credit score has suffered. We have only been late once in two years. We have plenty Equity and we are in a booming neighborhood (Old Fourth Ward Atlanta). We looked for help everywhere until we came across Birdeye and we found out he has helped a lot of people in our situation, so we decided to try him out. I must say he cleared all of our debts and also improved out score in 3 days! Its amazing how a year ago we almost declared bankruptcy.
    I’d recommend birdie to anyone trying to get out of any form of debt or improve their score….thanks Birdeye!

    BIRDEYE dot HACK at GMAIL dot COM….