Equity Growth
Whenever home buyers take out Commonwealth Bank home loans they all have one thing in common. They all want see the equity in the property grow as soon as possible. As the equity you have in your property grows the closer you are getting to actually owning the property outright because equity simply means the difference between what you owe on your Commonwealth Bank home loans and the market value of the properties you are purchasing.
How to Grow Equity
Equity can grow in two ways:
- The obvious one of course is through the repayments you make off the principal. The principal being the actual money owing on the property itself as opposed to the interest. The repayments you make in interest reduction does not affect the equity you have in the property. Many home buyers choose to pay interest only for a certain period in order to assist them with their cash flow at the time. This is often an option taken up with property investors, but while exercising this option you are not building your equity holding in the property, nor are you getting any closer to owning the property outright.
- The other way of building equity in the property you are buying is through its value rising as a result of housing price rises in the area where your home is located or through you carrying out renovation work adding value in that manner yourself. Many property investors who intend to resell once the property value has risen sufficiently rely on their equity growing in this way rather than paying any money off the principal which is much slower.
Home buyers who have purchased their homes with the help of Commonwealth Bank home loans with no intention of reselling at an early date, gain little, if any benefit from house price increases or from any added value resulting from renovation work. Although the equity they hold in their properties grow, the lowering of the principal relies solely on the repayments being made.
Weekly and fortnightly repayments build equity faster than monthly repayments.
It is for this reason many borrowers choose to repay their home loans on a weekly or fortnightly basis rather than monthly, with the repayments based on the monthly rate. This means a fortnightly repayment would be half of the monthly rate and a weekly repayment a quarter of the monthly repayment. As there are 26 fortnights in a year you will end up making the equivalent of an extra month payment every 12 months. This adds up over a long period of time and allows you to pay more off the principal during that time as well as give you a considerable savings in interest repayments.
Additional payments build equity.
There are two ways in which you can make additional repayments off your Commonwealth Bank home loans:
- You can make additional repayments as lump sums when you have the extra funds available such as any bonuses from work or taxation refunds.
- You can arrange to pay more than you are required on your weekly, fortnightly or monthly repayments. This can be arranged through your direct debt or your automatic funds transfer arrangements.
Either way you will reduce the amount owing on the principal, as well as interest, which means the term of the loan will be shortened overall and you will finish up saving many hundreds or even thousands of dollars over the longer term of 15, 20, 25 or 30 years, whatever the term of the loan happens to be.
Line of Credit helps many build equity faster.
The Commonwealth Bank home loans, Viridian Line of Credit loan, links your home loan to your everyday living. This home loan allows you to use the equity you have in your home to draw against to pay everyday bills etc, in return for you reducing your home loan balance by exercising the option of having your pay or other earnings paid directly into your home loan account. With a Viridian line of Credit home loan you will receive an approved limit that you can draw against, or make payments to, much like that of a credit card. You can draw as much as you wish as long as it is within the limits allowed, the same as any other transaction account, whenever you wish to do so. The line of credit home loan also allows for lump sum payments being deposited whenever you have money available.
An interest off-set savings account suits those with large savings.
If you are fortunate enough to be able to put your savings to work for you there is no better way than to buy your home with a Commonwealth Bank home loans Mortgage Interest Saver Account. This home loan utilizes a linked savings transaction account to off-set your interest earnings from your savings account against that of the interest costs of your home loan, on a daily basis. In this way you can save thousands of dollars of interest repayments over the term of the loan as well as cut many years off the loan itself. It is especially attractive to those with higher savings that are not otherwise invested.
Using equity to invest.
When you have sufficient equity in your home it can be used as a deposit on the purchase of another property that you can use as an investment. This is a wealth creating move that can lead to financial independence. Equity can also be used to pay for a holiday, new car or any other purpose you may wish to put it to. Then again you may choose to enjoy the fruits of your long term investment and bask in the freehold asset that you have built for yourself and your family.
Related posts:
- NAB Home Equity Line of Credit
- Peak Performance Equity Mortgage
- Need Some Money? Unlock the Equity in Your Home
- Heritage Bank Living Equity Line of Credit
- Property Investment Growth
- Line of Credit Equity Loans
- IMB Equity Line – Advantage
- Commonwealth Bank Viridian Line of Credit
- NAB Home Equity Line of Credit
- Line of Credit Equity Loans
Top Home Loans
| Home Loan | Details | Interest Rate (p.a.) | Comp Rate^ (p.a.) | App Fee / Ongoing Fee | Max LVR | Min & Max Borrowing | |
|---|---|---|---|---|---|---|---|
 Loans.com.au - Dream Catcher | A home loan offer with a $0 application fee and one of the lowest available home loan interest rates. | 5.85% | 6.21% | $0 / $375 | 80% | $50,000 / $750,000 |
 
|
 Bankwest Online Home Loan | A low interest rate home loan with a $0 application fee and ongoing maintenance fees. This offer is exclusively available by applying online. | 5.97% | 5.97% | $0 / $0 | 80% | $100,000 / $1,000,000 |
|
 Illawarra Home Loans Bank Beater Home Loan | A low variable rate, beaten down even further by 0.05% p.a. after 5 years. | 6.07% | 6.35% | $0 / $345 | 90% | $250,000 / $1,000,000 |
|
 State Custodians Mortgage Company Standard Variable Offset Loan | Awarded the 2011 Non bank Lender of the Year this feature-packed loan rewards customers with a bonus rate drop of 0.25% after 5 years. | 6.02% | 6.23% | $0 / $345 | 95% | $150,000 / $1,000,000 |
|
Ask A Question