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Home equity is the value of your home minus the amount you still owe on your home loan. So if your home is currently worth $850,000 and your mortgage is $450,000. Then you have $400,000 equity, which you may be able to borrow against.
There are several ways that home equity increases, including:
As we’ve said, property values have been increasing, so if you’ve owned your home for a while, it may well have accrued some equity. Find out the current value and subtract the amount outstanding on your mortgage to get an idea of your home equity.
Not necessarily. If you have equity in your home loan, it means that you’re not paying interest on that portion of the value of your house. You only pay interest on the amount you owe on your home loan. As long as you make your regular repayments, or even additional repayments, you could save on the total amount of interest you accrue in your repayments over the life of your loan. Having money in an offset account is another way to be charged less home loan interest.
A home equity loan is similar to any secured loan. You borrow money and the security is the equity that you have built up in your home.
One of the benefits of a home equity loan is that it can come with more flexible spending terms. Some of the reasons people take out a home equity loan include:
iSelect has partnered with Lendi to help you compare home loan products from a range of Australia’s lenders. Click here to get started comparing from a range of lenders online, or give Lendi a call on 1300 186 260.
Updated Last: 25/07/2022