Saving for things like holidays or renovations can be difficult while you’re paying off a mortgage, but it doesn’t have to be. Home equity loans are designed to give you access to the equity in your existing home loan via a line of credit loan.
Mortgage refinancing is a common way of tapping into the equity you’ve built up in your existing property. The equity in your home is the difference between the property value and what you owe on your mortgage.
The amount you can borrow depends on how much equity you’ve built up in your property, and some other criteria. Generally, you’re limited to borrowing up to 90% of the value of the property.
You can use the funds from your line of credit loan to buy an investment property, renovate your existing home or to take a break.
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 loan is an interest-only loan, and in some cases you may be able to capitalise the interest payments.
