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Home Equity Home Loans
Mortgage refinancing is a common way of accessing the equity you have built up in existing property to use for other purposes, usually via a new equity home loan. Some of the uses for an equity loan include renovating your property or using the equity to assist with a property investment purchase.
How much you can borrow is subject to the amount of equity you have built up in your property and other serviceability criteria, but as a guideline, even if you own your home outright you are likely to be limited to borrowing a maximum of 80% of the value of your property.
How do home equity loans work?
Home Equity loans are most commonly offered as a line of credit loan, which allows you to withdraw funds up to a set limit at any time. You may be able to draw down the initial equity loan either as a lump sum or in stages. Generally a line of credit is an interest-only loan, and in some cases you may be able to capitalise the interest payments. Interest rates are usually higher than for a standard variable home loan.
Under an Equity Finance Mortgage (EFM), you do not need to make any monthly interest or principal repayments until you choose to repay the loan. In combination with a traditional mortgage, EFMs® can be used to:
Reduce the upfront and ongoing costs of buying a home by up to 25% or more Reduce your monthly repayments by up to 25% or more Buy up to a 25% or more valuable home
