How would I go about using my equity to purchase another property?

Any general questions you might have in regards to loans and finance.
Aurelia
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Joined: Wed Apr 10, 2019 12:03 pm

How would I go about using my equity to purchase another property?

Postby Aurelia » Wed Apr 10, 2019 12:04 pm

Hi, I would like to purchase an investment property using the equity in my house. The current mortgage balance on my house is $350k with the current estimated market value of $680,000 last time I checked. How would I go about using my equity to purchase another property? What are the different ways I can access my equity for a new loan?

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Otto Dargan
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Re: How would I go about using my equity to purchase another property?

Postby Otto Dargan » Wed Apr 10, 2019 2:00 pm

Hello Aurelia. Welcome to the forums.

A home equity loan allows you to borrow against the equity you have in your home to invest in shares or property. It is also known as cash out.

With a home equity loan, you can borrow up to:
  • 80% of the value of the property (no evidence required).
  • 90% of the value of the property with evidence.
  • No limit on the amount that can be released.

According to the figures you’ve provided you may be able to release/access up to $262,000 (90% of the value of the property).
Some lenders have cash out restrictions limiting the amount you can cash out from anywhere between $10,000 to $50,000. Luckily, not all lenders do.

There are other options when accessing your equity to buy another property via a Line of Credit (LOC) orcross-securitisation. They both are complex and come with their own benefits and limitations. Cash out is the simplest and easy option.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a home equity loan with no cash out restrictions and 100% offset to get maximum benefits out of your investments.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Aurelia
Posts: 3
Joined: Wed Apr 10, 2019 12:03 pm

Re: How would I go about using my equity to purchase another property?

Postby Aurelia » Wed Apr 10, 2019 6:58 pm

I don’t understand why they require evidence if I’m just accessing my own equity. Do I need to get a letter from my solicitor as proof? What’s acceptable as proof to the banks?

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Otto Dargan
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Re: How would I go about using my equity to purchase another property?

Postby Otto Dargan » Wed Apr 10, 2019 8:17 pm

Hi Aurelia,

If you’re accessing more than 80% (the maximum you can borrow is 90%) of your equity to buy another property, it is best to provide a letter from your conveyancer (solicitor) or a copy of the Contract of Sale as evidence or proof.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Aurelia
Posts: 3
Joined: Wed Apr 10, 2019 12:03 pm

Re: How would I go about using my equity to purchase another property?

Postby Aurelia » Thu Apr 11, 2019 11:37 am

Got it. So, how does the equity home loan process work? What are the differences between an equity loan and a loan increase?

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Otto Dargan
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: How would I go about using my equity to purchase another property?

Postby Otto Dargan » Thu Apr 11, 2019 12:47 pm

Hi Aurelia,

Basically, both allow you to borrow against the equity you have in your property and are very similar.

With equity loans, you’ll be applying for a new home loan with its own interest rates and features.
With a loan increase (top-up) loan, you simply add the funds you want to borrow on top of your current home loan, so the process is much quicker.

Give us a call on 1300 889 743 or fill in our free assessment form to discuss your situation further and let us help you find the best solution suitable for you.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts


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