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Understanding home loans

Using the equity in your home

ANZ

Equity is the difference between the value of your property and how much you owe on it. Find out how unlocking the equity in your home could open up opportunities.

What is home equity?

As a homeowner, you build up equity in your home over time, when you pay down your home loan and if the value of your property grows.

How much equity do I have in my home?

The amount of equity you have in your home is the difference between the value of your property and the amount owing on your home loan. For example, if your property is worth $750,000 and you have $250,000 owing on your home loan, then you could have up to $500,000 in equity.

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How can I use the equity in my property?

Depending on your income, living expenses and how much you owe on your home loan, your lender might let you borrow additional funds, using your home as security. You should seek advice from your financial adviser and registered tax agent before making a decision whether to do that. 

Most home loans will fund up to 85-95% of the value of your home. However, if you have less than 20% equity, it’s likely you’ll have to pay Lenders Mortgage Insurance (LMI).

If you have an ANZ home loan, have built up equity and are able to make the repayments, you may be able to borrow against your equity in the following two ways.

  1. Apply for a supplementary loan
  2. You could take out an ANZ Supplementary Loan. You can choose an eligible ANZ loan that suits your needs best, which doesn’t have to be the same as your existing loan. You could then use that money for a variety of different purposes according to your needs.

  3. Refinance your current home loan
  4. You could refinance your current home loan to access your equity. Talk to our Home Loan Specialists about how you may be able to take advantage of your equity.

Examples of using equity

You may be able to use your home equity for a variety of purposes. Some common uses of home equity are:

  • Investing in property
  • Unlocking the equity in your home could be an option if you are thinking about purchasing an investment property, as it could help with a deposit for that purchase. Investors may be able to negatively gear their property investments depending on their personal circumstancesdisclaimer.

  • Renovating your home
  • Renovating your home can not only make it more suitable for your needs, it can potentially also increase the value of your property. Accessing your equity could help make your renovation plans possible.

  • Investing in shares or other investment products
  • Some people use the equity in their property in an attempt to help them grow their wealth. You could use your equity to invest in the share market, buy bonds or buy into a managed fund. As with any investment, there are risks involved (for example, the value of your shares or managed fund holding could go down, not up) and there is an increased risk when you borrow to invest, so so you should obtain financial and tax advice before you commit to engaging in such a strategy.

How does equity work when buying a second home? 

When you purchased your first home, it’s likely you saved a sizeable deposit. Now that you already own your first home, any equity that you’ve built up in that property could be put towards the deposit on your next home. This means you could potentially buy your second home with little or no cash deposit depending on your circumstances.

Depending on your income, living expenses and how much you owe on your home loan, you might be able to refinance or apply for a supplementary loan, using your home as security. However, you should understand that the more you borrow against the value of your home, the higher your repayments are likely to be. This also means you could be at greater risk of losing your home if you cannot meet those repayments. You should seek advice from your financial adviser and registered tax agent before engaging in such a strategy. 

If you have equity in your home or an investment property, you can talk to our Home Loan Specialists about how you may be able to take advantage of your equity to buy your next property.

How to build equity in your home

There are two main ways to build equity in your home.

  • Reduce how much you owe the bank
  • As equity is the difference between the value of your home and how much you owe on it, the less you owe on your home loan, the more equity you will likely have.

    Find out how you can pay off your home loan faster with these tips.

  • Increase the value of your home
  • If you’ve owned your home for a number of years, the value of your property may have increased over time. Besides owning your property long enough to potentially enjoy capital growth, renovating and improving your home may add to the value of your property. If you'd like to get an estimated price range for what your property is worth, you could request a free ANZ Property Profile Report

What to consider when using your equity

The more you borrow against the value of your home, the higher your repayments are likely to be. This also means you could be at greater risk of losing your home if you cannot meet those repayments.

Before you borrow against your equity, it’s worth considering whether:

  1. the term of your loan will be extended
  2. you’ll be able to make repayments if interest rates rise; and
  3. you have sufficient funds outside of home equity for emergencies.

You should always speak to your financial advisor and registered tax agent for advice on your specific situation.

If you have any questions, you can talk to our Home Loan Specialists about how you may be able to take advantage of your equity.

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Using the equity in your home
Home Loans Specialist
ANZ
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Free ANZ Property Profile and Equity Report

You may have equity you could access to borrow for renovations, build a house, or to purchase an investment property. Our free ANZ Property Profile and Equity Report can help you understand how much equity you may have and how you could use it.disclaimer

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As well as any other home loan queries you may have.

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Other ways to get in touch

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You can also chat to an ANZ accredited broker for help with your home buying, investing or refinancing needs.

The information on this page does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you and read the relevant terms and conditionsProduct Disclosure Statement and the ANZ Financial Services Guide (PDF) before acquiring any product. 

Applications for credit subject to approval. Terms and conditions available on application. Fees and charges apply. Australian credit licence number 234527.

ANZ Property Profile Reports are not personal advice or a recommendation. They contain general information only and do not take into account personal needs and financial circumstances. They are for personal use only. Price range estimates and estimated total equity are estimates only. They are based on certain available information and/or equity estimates provided when ordering an ANZ Property Profile Report. An ANZ Property Profile Report is not a valuation of the property or a guarantee of its market value or future sale price. Price range estimates may change daily and the actual sale price (if the property is sold) may be different.  Customers should make their own enquiries and obtain independent financial and legal advice before deciding whether to use their equity to invest in property, renovate or deciding the price they are willing to pay for a property. Sales history and past performance are not indicative of future price or performance.

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ANZ Mobile Lenders operate as an independently operated ANZ Mortgage Solutions franchise of Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522. Australian Credit Licence Number 234527.

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ANZ does not provide tax advice. You should discuss the tax implications of any investment strategy with your tax adviser or registered tax agent before deciding to proceed.

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