Buying an investment property can be a great way of building wealth and securing your financial future.
Saving a deposit, though, can be hard. One way to fast-track the process is to borrow against the equity in your home and use that money to fund the deposit.
What’s equity?
Equity is the difference between the value of your home and the mortgage outstanding on the property. For example, if your home is worth $1 million and you still owe $600,000 on your mortgage, your equity would be $400,000.
Equity gets created in two ways:
How much equity can you access?
If you want to borrow against your equity, you need to refinance. Most lenders will let you borrow up to 80% of your home’s value, minus the outstanding mortgage. This is known as your useable equity.
In the example above, your useable equity would be $200,000:
Potentially, you could put some of this $200,000 towards a deposit on an investment property. Just keep in mind you still need to meet the standard borrowing criteria.
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We appreciate your message and a Shore Financial broker will respond to you within a few short days. In the meantime, here’s a few links to keep you occupied.
