Home Equity Loans

Commonly referred to as a second mortgage or equity release, a home equity loan allows you access to the equity you hold in your home. In simple terms, equity is the difference between the value of your home and the amount you owe on your mortgage, eg. home value is $300,000 with a mortgage balance of $200,000 then your equity is $100,000.

Home equity loans are often used as a means to wealth creation through investment, the loan is mortgaged against the equity you hold in your home.

Before you ask "how long's this been going on ?!", the "real life" implications of using your home equity as collateral can be quite involved and not without risk.

The rewards can be quite outstanding, but put away the rose coloured glasses!.

Before committing to a loan, we strongly urge you to at least follow these steps :-

* visit the Australian Securities and Investments Commission's (ASIC) FIDO website where you'll find comprehensive information about home equity loans

* do some casual research and get a "feel" for the current market

* study any relevant lenders' product disclosure statement(s)

* contact us for guidance, we can introduce you to a range of loans from most major lenders and give you a direct comparison

* seek independent, professional legal advice and consult with a licensed financial adviser before committing to a home equity loan

* when you're ready to commit, contact us to arrange an appointment and we'll take you through the application and approval process


Types of Home Equity Loans

Fixed amount

Essentially a secured (read low interest) personal loan using your home equity as collateral.

This type of home equity loan would suit someone who has a large project in mind perhaps a house extension, major kitchen renovation, etc. or as a means of wealth creation through the purchase of an investment property or even share trading.

 

Line of credit

This type of home equity loan is similar to a credit card account, again using your home equity as collateral and with a favourable interest rate.

More suitable for a number of smaller projects such as new carpeting, fencing, etc

The main advantages with these types of "instant purchasing power" are the (possible) access to a larger amount of money with a significantly lower interest rate when compared to conventional personal loans or credit cards.

You are free to use the funds available for any worthwhile purpose.