Borrowing against your home equity.

Accessing equity. How can you do it, and most importantly should you do it?

Last week on our socials, we mentioned accessing equity can be an option for those who are homeowners and seeking a way to secure a loan. Put simply, when you’ve been a good borrower, mortgage lenders may let you access the equity on your home - that is, the amount no longer owing on the mortgage. Usually, the equity release will be capped at 80% by most lenders. 

Could I get denied access to my equity?

Following on from last week’s post on equity, we’ve been asked - have we ever seen somebody who has a lot of equity get declined to borrow against it? Yes, definitely. 

Purpose is everything. Back in the early 2000s; you could almost get equity cash released for anything. In the industry, we even referred to them as 26 Red Loans! You could practically have cash released and head on down to the casino.

However today things are vastly different.

Purpose is everything

Lenders want to know exactly why you want to borrow the money;
and their accepted reasons can be pretty slim.

The government and authority bodies now decidedly run checks on why
lenders are releasing equity to borrowers. If you can prove the use
of the loan, and have a justification as to why; it should be doable.
Things such as further property investment, refurbishments, other investment opportunities,
and even things such as car loans and holidays can all be achieved through borrowing
against your equity. 

In Summary

To figure out how much you can borrow against your useable equity,
your bank will likely ask about your income, age, how many kids you have,
additional debts, and many other factors.

Accessing your equity can be a great option for those who are
wanting a leverage up, or a way to smooth out life’s little bumps.
However, as usual, it’s best to seek the advice of a
professional before doing so. This way, you can ensure your long term
plans won’t be hindered.

If you’d like to discuss your finance options, click here to schedule a call with Stuart Bayliss.

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