So… you’ve owned your home for a while now and have accumulated some equity. Basically, you owe less than what your house is valued at. It might be time to start thinking about how to use the equity you’ve built up…
There are plenty of things you can do with your home equity. Most of these fall into two categories: improving your lifestyle or increasing your wealth. It’s time to think about what you want in your life and whether using your home equity is a good way to get it.
Here are some things you can use your equity for:
Whether you’re in need of a relaxing break or you have an itch to go and explore a new culture – It’s never too late to get out and see the world. Taking a much deserved holiday is a great way to use your home equity, especially if there are places that you’ve always wanted to visit. Ticking things off of your bucket list is good for your soul!
Has your trusty old car seen better days? Or is your family growing in size – therefore your car needs to? You can upgrade to newer model, a bigger car or even get the sports car of your dreams if you don’t have to cart your kids around anymore.
Renovating your home is a good way to improve your lifestyle and increase your wealth at the same time! Two birds – one stone, as they say. You can build an extension, renovate the kitchen, put in a pool, add a level, or landscape your garden – whatever you want to do!
If your main goal is to increase your wealth, you can use your equity to purchase things like shares or even an investment property (or use the equity for a deposit). Your home equity is likely your biggest financial asset, so it makes a lot of sense to leverage it to further grow your wealth and your retirement nest egg.
Whatever it is you want in your life, using your home equity may be a good way to get it.
Before you get too excited and jump the gun
Tapping into your home equity can be a great way of financing many different things. It can do many things, like keep the monthly repayment down (as opposed to getting out a personal loan) and it can even save you a lot of interest. However, as with any financial decision, you need to consider if it’s the best way for your unique circumstance. Yes – i know i talk about your circumstance a lot, but it truly is the most important variable.
For many people, the home they live in, is their most valuable asset. Not only that, but it’s an essential part of many retirement plans. With that in mind, here are a few things you need to consider:
Risks – If you plan to reinvest your home equity to increase your wealth, there are no guarantees your investment will increase in value. Always get expert investment advice.
Debt – Using home equity to purchase other things increases the size of your home loan and your debt.
Costs – There may be bank fees associated with using your home equity. Also, if your equity drops below 20%, you may need to pay Lenders Mortgage Insurance.
If you’re not sure if this is the right option for you, or even if you think it might be, it’s best to give us a call on 0412411823. We can have a little chat about making choices that are right for YOU!
Disclaimer: Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.