Many Australians own homes that are now worth far more than they still owe on their mortgages. With a home equity loan, you can unlock that "equity".
You'll hear a lot about equity in relation to home loans. Equity is the difference between what your home is worth today and what you still owe on your mortgage.
If your home is worth $400,000 and you only owe $100,000 on your mortgage, you have $300,000 in home equity. Previously, the only way you could utilise that equity was by selling your house. Now there is another way.
With a home equity loan, the lender lets you borrow against the equity you have built up in your loan. Let's say you need money for your daughter's wedding. You don't have any ready cash but you do have equity in your home. A home equity loan is one of a range of possible solutions.
If you need money, you could use a credit card or take out a personal loan. But you'll probably get a better interest rate with a home equity loan because the loan security - your house - is so good.
One thing you need to remember with a home equity loan is that you still need to make monthly repayments. To learn more about home equity loans, contact an MFAA member today.