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Article | 5 minute read
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.
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.
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.
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.
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.
You may be able to use your home equity for a variety of purposes. Some common uses of home equity are:
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 circumstances.disclaimer
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.
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.
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.
There are two main ways to build equity in your home.
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.
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.
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:
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.
We’ve simplified our home loans and dropped bundled packages. Get discounted interest rates upfront on eligible loans,disclaimerno ANZ set up or ongoing feesdisclaimerand only pay for the extras you want.
No more packages. No annual package fee. Same great rates.
Get practical tips to help you in your property journey, whether you're just starting out, ready to buy, or trying to sell.
Get detailed property and suburb information to help you plan and be more informed when buying, selling or refinancing.
Get started in just 5 minutes. Apply for pre-approvaldisclaimer, a new home loan, refinance or top up your existing ANZ home loan.
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 conditions, Product 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 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.
ReturnEligibility criteria applies to the Special Offer discount for ANZ Simplicity PLUS, including $50,000 or more in new or additional ANZ lending. Offers can be withdrawn or changed anytime.
ReturnOther home loan fees including Late Payment Fee, Lock Rate Fee, Early Repayment Cost (Fixed Rate Loans) and ANZ Equity Manager facility fee still apply. Loan security fees including Lodgement Fee, Production Fee, Settlement Fee and Search Fee still apply however will not be charged on establishment of a loan. Government fees and charges (including government search fees and stamp duty) may still apply.
ReturnProperty price information in an ANZ Property Profile Report is an estimate (not a valuation), may not be available for all properties, is for personal domestic use only and may change daily. Actual sale prices may differ. The report is not personal advice and ANZ takes no responsibility for any error or omission.
ReturnANZ may provide pre-approval (also known as approval in principle or conditional approval) to eligible customers who apply for an ANZ home loan and complete an application form and satisfy any other applicable requirements. Pre-approval is an approval for a loan subject to conditions being met, including that security is satisfactory to ANZ. Australian Credit Licence Number 234527.
ReturnANZ 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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