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What Is Equity?

Your equity is the difference between the value of your home and what you owe on your home.

Think of your equity as the money you would have left over if you sold your home, and repaid your home loan.

How to calculate your equity

Simply deduct your loan amount from the estimate value of your home. We have written a guide to help you estimate the value of your home.

Property value – Loan amount = Equity

For example, if your home is worth $500,000 and you owe $200,000 then the calculation would look like this:

$500,000 – $200,000 = $300,000 in equity

Why is equity so important?

The equity in your home is important! It is usually the biggest asset you have. You should aim to repay your home loan before you retire.

People who have little equity in their property when they reach retirement age, may be forced to either downsize their home or continue working to repay the debt.

Accessing your equity

You can access your equity with a home equity loan. This may be subject to equity release restrictions, also known as cash out restrictions.

The funds released can then be used for any worthwhile purpose including renovating your home, investing in property or consolidating debts.

Please call us on 1300 889 743 or enquire online and one of our mortgage brokers can assist you to access your equity.

Increase your equity!

This is why you should try and minimise unnecessary spending and aim to pay off your home loan as soon as possible. This will also decrease the interest that you pay and save you money as well as increase your equity.

If you are an experienced investor then you can use your equity to help you gear your investments in shares or property to maximise your returns.

  • Brooklyn

    Can I get a cash out from my equity loan?

  • Hi Brooklyn,

    Depending on the purpose of your cash out, your current borrowing and the remaining equity on your property, you could be able to cash out up to 95% of your property value.

  • Reek

    But cashing out equity is risky, isn’t it?

  • Hi Reek,

    Yes, cashing out equity is risky as when your equity loan is advanced by the bank, a large lump sum of money is released directly into your bank account or into a line of credit for you to use later. Once this has been done, the banks no longer have any control over how you use those funds. Banks are concerned that you will not use the funds according to your intended purpose. Some people may use the money to make the loan repayments because they are living beyond their means.

  • Shahi

    I’m Australian but living and working in Laos. I own a house in WA and I want to use its equity to invest in another house there. Don’t need much – around $400k at 70% LVR is okay. Am I okay to do this?

  • Hey Shahi, we can help you with this. We’ll need you full details so we can come up with the best recommendation regarding the lender that can be just right for your situation and loan needs. Please speak with one of our Australian expat home loan specialists by calling our overseas number +61 2 9194 1700 or simply enquire online:
    https://www.homeloanexperts.com.au/free-quote/