Need Some Money? Unlock the Equity in Your Home
If you are a home buyer who needs money for any purpose, you can tap into the equity you have in the value of your own home at any time of your own choosing- if your home loan is structured as Line of Credit or Equity loan.
By unlocking the equity in your home whenever you need some money, you will avail yourself of a way you can get that new bathroom built, put in the sauna, or build on the extra bedroom that your family so badly needs, without having to go cap in hand to your banker for the funds to do so.
Unlocking the equity in your home saves you the time and expense of taking out a personal loan, or delving into your life time of savings, will deliver you all the money you need but with an interest cost of no more than the cost of the home loan itself.
- In effect a Line of Credit home loan is no more than an interest only home loan that has no expiry date:
- It is structured on the same basis to that of an overdraft facility that you have secured against the value of your home.
- The amount you can withdraw at any one time is determined by the amount of equity you have in the property.
- It is therefore in your interest to pay down the loan at every opportunity as this gives you more equity to later make use of when you find you will need funding for some other project.
- The amount you actually pay off the principal is completely up to yourself. You yourself choose when to make a payment and how much.
- Interest is charged on the amount of money you owe each month.
It is in the interest of most lenders to allow you to make as many deposits, or repayments, as you wish during the life of the Line of Credit home loan. At the same time you can redraw on these deposits as long as you keep the account in credit. There could be extra costs involved for some of these types of transactions however and it will pay you to become familiar with the fine print of your home loan so that you know exactly where you stand at all times.
This is why you should fully examine all offers made by lenders as there are many variations of Line of Credit home loans, all containing different interest rates and varying features. Some may suit your particular needs while other may not.
If you need some money? Unlock the equity in your home, can be the answer that you have been looking for. While doing so however keep the following ideas in mind so that you can fully maximize the benefits:
- Property investors can benefit more fully with a Line of Credit home loan that has a portability feature built in. This means that you can transfer the facility between your different property holdings. This feature can save you costs on government stamp duty and other associated fees.
- You will find that you will receive a credit card along with your Line of credit home loan. Use this card for your day to day living but make sure you fully pay off the card debt prior to the interest free period running out each month.
- Make arrangements to have all your wages paid directly into your loan account every pay period. This will reduce any amount of interest on the loan and any funds unspent after you pay off your credit card will go towards building up more equity.
A loan, such as a Line of credit home loan, will require much financial discipline and a comprehensive awareness of prudent budgeting.
If you feel you are lacking in this area it may not be the correct home loan for yourself to take on. A Line of Credit home loan does attract a higher interest rate than does the standard variable interest rate home loan and there may be other costs and fees involved. If you are not aware of all these requirements you may fine it hard to pay much off the principal and the loan could run many years over the time you originally planned for.
Related posts:
- NAB Home Equity Line of Credit
- Bricks Made of Money: The Home Equity Journey
- eChoice Home Equity home Loans
- How to Release Equity from Your Home
- How to use a Line of Credit or Home Equity Loan to Invest
- Bankwest Equity Access
- Line of Credit Equity Loans
- IMB Equity Line – Advantage
- Members Equity Super Members Home Loan (SMHL) Interest Only
- Line of Credit Home Loans
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Hi,
Am I able to transfer my equity in an investment property to my mortgage in residential home?
Thanks
Rajinder