Home Equity Loans

The Australian home loan market is a vastly different place than it was a few decades ago. property mortgage finance money. Today, there are a number of home loan products on the market designed to suit a range of financial circumstances. One of the these products is a home equity loan, which is a credit facility that taps into the existing equity in your property. A home equity loan is a type of loan in which the borrower uses the equity of his or her home as collateral. The loan amount is determined by the value of the property, which is usually determined by a recent valuation.

The types of home equity loans

The most common type of home equity loan (also called a line of credit loan or LOC for short) available is one that provides a loan amount (based on a property valuation and also considering the maximum loan-to-value ratio of that particular lender), together with a variable interest rate, that can be used for any purpose whatsoever. Generally, a home equity loan will be provided to borrowers who not only have equity in their property but also have shown financial discipline, which often means someone who has a solid credit history and a stable income. The funds are like a revolving line of credit, based on the equity available and any lender LVR limitations. The borrower has the ability to use the money whenever is necessary and is only charged interest on the proportion that’s used.

The benefits of home equity loans

One of the main advantages of a home equity loan or LOC is that it allows you to borrow money at a lower interest rate when compared to personal loans, credit cards and margin loans.
This is because you’re using your property as security, meaning you pose a lower risk for the lender.The benefits of home equity loans. Of course, another benefit is that you can take advantage of the equity that has built up in your property, which you could otherwise not access except by selling your home.
If you want to succeed at property investment then you need to remember a key concept, namely that you want to expand your investment while using as little of your own money as possible.
A good investment should be self-financing whether it’s through rental income or tax deductions and should certainly not cause you cash flow problems.