Title:
Leveraging your home loan to invest in property
Subtitle:
A wealth-creation strategy for borrowers, who have built up equity in their own homes, is to use this equity to buy another property. With interest rates at record lows, it is a good time to get this strategy under way.
Body:
Home equity is the difference between the value of a property and the outstanding mortgage. For example, say the value of a home is $500,000 and the mortgage is $300,000. This means the borrower’s available home equity is $200,000.
However, borrowers cannot use all their available equity as security for another loan. Typically a financial institution will lend 80 per cent of the value of the home less any outstanding debt on it – although it is possible to borrow more by taking out lenders’ mortgage insurance.
In the example above, the usable equity would be $100,000 ($500,00 x 80 per cent, minus $300,000).
So rather than finding cash to fund a deposit for another home, $100,000 can come from the borrower’s home equity. However, having equity in a home does not always guarantee a bank will lend money. They take a range of factors into account such as income, other debts and the family situation, for example, how many children the borrower has.
Borrowers who decide to leverage their home equity to buy another investment property, should have an exit strategy in place in case the investment no longer works for them. They are also advised to pay off their own home loan as fast as possible as no tax breaks are available on this loan.
Source: http://www.resi.com.au/about-us/corporate/press-releases/Leveraging-your-home-loan-to-invest-in-property
About Resi Mortgage Corporation:
Resi is an award winning, market leading non-bank lender specialising in; home loans, commercial loans, investment loans and financial services. Resi is an Australian owned and operated lender with over 25 years’ experience dedicated to providing Australian’s with low cost, innovative product s to help them own their dream. Resi provides a full service operation that includes, local lending specialists, and an Australian based customer service team.
Contact Resi Mortgage Corporation:
Press Contact’s full name: Ricki Hudson
Press Contact's email:
Press Contact's phone number+61 2 8204 5047
Press Contact's address Level 3, 458 Wattle Street, Ultimo, NSW 2007
Keywords:
mortgages, leveraging, Investment property, Resi, Australia
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