An equity loan allows the home owner to get a loan by using the equity as collateral security.
Equity in simple terms is the difference between what you owe on the mortgage and the value of your home.
For example, if you have $100,000 to pay off on your home that is worth $400,000 then you have $300,000 worth of equity. Therefore with an equity loan you are able to borrow against this amount.
You can use an equity loan for renovation purposes, investments in shares, to purchase another property or to refinance your mortgage.
Which lenders offer an equity loan?
The interest rates and fees that can be offered for an equity loan will vary across all lenders, however all the major banks offer similar features for equity loans. Some of the common products are:
- CBA– MAV package line of credit residential equity / MAV standard variable rate / MAV package 12 month discounted variable rate / Standard variable rate / Line of credit residential equity rate / MAV package 1 year guaranteed rate
- Rams- Line of credit professional pack / Line of credit / SmartWay / SmartWay professional pack
- Westpac- Premier advantage equity access loan / Equity access loan
- St George- Advantage home loan package portfolio loan / Advantage home loan package 1 year discount variable rate / Standard variable rate home loan / Portfolio loan
- Suncorp- Money manager asset line / Asset line
- ANZ– ANZ portfolio loan equity manager / ANZ portfolio home loan / Breakfree equity manager / Equity manager / Professional benefits equity manager
- NAB– Tailored home loan / NAB home equity line of credit / Introductory rate loan 3 year variable rate / National flexi plus / Amortising flexi plus
- And many more.
How does an equity loan work?
Equity loans allow you to have a line of credit on your mortgage up to a certain amount. The loan can be taken in full stages or as separate stages, which makes it a particularly useful type of loan for renovating or investing purposes.
The amount you can borrow is determined by your situation – your income and assets are taken into account as well as your existing debts.
If the equity is going to be used for an investment property then your current property values will also be assessed.
Enquire online to get the right advice on what will best suit your situation for this type of home loan.
Who can benefit from an equity loan?
Saving for renovations or for a deposit can take time, in fact it can take too much time. By taking out an equity home loan you are able to start renovations or purchase an investment property much sooner.
However, it is essential to remember that all of your debts need to be carefully managed in order to maximise investment returns and to minimise risks. You can benefit from an equity loan if you:
- Own a property and are looking to purchase an investment property.
- Own a home and you would like to make renovations.
How do I apply for an equity loan offset account?
Enquire online or call us on 1300 889 743 if you would like expert advice on equity loans from one of our mortgage brokers.