Building Home Equity
Equity refers to the difference between what you owe on your home (your mortgage) and its value. For instance if your home is worth $300,000 and you owe $150,000 on your
home loan, you have $150,000 in equity.
So this means the wealth gained through buying a property and seeing it increase in value, increasing the difference between what you owe and what you can sell the house for. Building equity is often a drawn-out process with many risks – but it can work well. There are many
home equity loans on the market which can help you access some of your equity to fund other projects.
If you are buying an investment property, location is extremely important, and it's always a good idea to look at areas where values are increasing. If you are going to live in the house then you will have other considerations to think about to ensure the house matches your life. However if you are not planning to live there, you have an advantage in that you can be more objective about the property.
Real estate agents, mortgage brokers and other industry insiders can offer invaluable advice about areas on the rise, and help identify the good and bad. There are several different ways to increase the equity building up in your home. Making additional payments is the most obvious way. Putting down a bigger deposit at the start, or making extra weekly payments will cut years off your mortgage, saving you thousands of dollars in interest. Hoarding savings in an offset account can yield similar benefits. Paying weekly rather than monthly can save you too as you will be repaying more over the year. Talk to your mortgage broker to discuss the best plan for you.Renovations are another way to build equity. In today’s climate, many home owners actually find it more profitable to build equity with bricks and boards. Think about the areas that you could improve, and go for sensible options rather than flashy personal preferences. Essentials such as a great working kitchen or bathroom are worth more than accessories like pools or a sun room. When you’re ready, do some homework and get several quotes, inspections and research your builders to make sure they’re licensed and that you’re getting exactly what you want.
Top Three ways of Building Equity:
- Pay down the mortgage quicker
- Renovate the property
- Offset Accounts
Talk to your local mortgage broker to find out how you can build equity on your home. Call us today on
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